What is NoFollow?

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Nofollow refers to an HTML attribute that is used to indicate to search engines that a hyperlink should not be indexed or considered when the rank of the link's target page is being determined. The nofollow attribute was created in order to help curb the increasingly problematic issue of search engine spamming; it was engineered by Jason Hellen from Blogger.com and Matt Cutts, head of the webspam team at Google.

What it Does
The nofollow HTML attribute does not block search engine access to a link. Rather it simply says to search engines, "Don't count this link when calculating page rank". It still allows access to the link. In other words, search engines can actually follow the link, and even index it; nofollow is simply an indicator for the search engines to discount the link in their calculation of the target's ranking. The different search engines being used today take different approaches to how they handle the nofollow attribute.

NoFollow Attribute and the Three Major Search Engines
Google has stated officially that they take the nofollow attribute literally, meaning they do not access the link's target page and they do not index it. However, several experiments conducted by various SEOs have determined that Google does in fact follow the link, though it does not index it or count it in its page rank calculations. Yahoo! also follows the link and it indexes it as well, but does not count it in page rank calculations. Bing respects the nofollow attribute as far as not counting it for page ranking, but it's unknown whether it follows and indexes the link or not.

When is NoFollow Used?
In its guidelines, Google suggests that webmasters should use the nofollow attribute on any links that were purchased or exchanged. Many webmasters use nofollow when linking to a competitor website, so as to provide users with useful content while avoiding giving their competitors a higher search engine rank. Blogs are also a good place to use the nofollow link, so as to discourage spammers from clogging up your comments. In terms of SEO, the nofollow attribute can be used to control the "flow" of internal page rank, though search engines are attempting to discourage and end this practice. Along with organic SEO services, it is best to optimize your webpages utilizing proper metadata and linking practices in order to make your site more Search Engine-friendly.