Link building (a.k.a. Link Development) is the process of gaining high-quality inbound links pointing to your website. This is an important practice because search engines use link popularity -- the measure of the quality and quantity of links pointing to a site -- as a crucial external factor in ranking. Generally the more links a website has pointing towards it, the better the link popularity and the rankings will be. However, not all links are equal. Some links are considered better quality than others and therefore have a higher value.
For example, to indentify quality links and determine an individual page’s value, Google uses an algorithm called PageRank. Along with analyzing the number of links to a website, PageRank also considers the quality of the page that links to a website. To learn more about PageRank, please visit http://www.prcheckingtool.com/pagerank.php.
Some effective link building strategies include article writing and submissions, blog writing, social bookmarking, social media profile creations, and link baiting.
From 1995 to as late as 2010, "Link Exchange" was the primary way to acquire links. In the late 2000's, however, fewer and fewer people were participating in Link Exchange because Google did not give it a high value. In 2011, Submit Express officially stopped providing Link Exchange services and announced the death of Link Exchange in this article: RIP Link Exchange.
A much better and newer practice of acquiring links is "Link baiting." Link Baiting is the practice of giving away something (such as a product, service, ebook or report) in order to generate media attention and links. In return, many people may discuss your brand or product via online blogs, social media sites and forums. Link Baiting requires special planning and most often you may need to spend a decent amount of money. A good example of Link Baiting is when GourmetGiftBaskets.com broke the record for the world's largest coffee at a trade show. Read the article here.