Eric Ward (www.ericward.com) sees link diversity this way: “Acquiring different types or diversity of links from a variety of sources is always better than multiple links from one source.”

Rand Fishkin’s got a pretty good explanation of how link diversity works.  See his “whiteboard friday” video below:

Link Diversity

SEOmoz Whiteboard Friday – Link Diversity from Scott Willoughby on Vimeo.

The emphasis is on the preference for a diverse link profile from multiple domains than a homogeneous one from a single domain (even if it is from a very strong domain with a high PageRank).

Link diversity can also impact your sites in other ways.  More links from a variety of domains also mean increased visibility for your site.  Think about the potential mix of traffic opportunities it can bring.  Also, having many links from the same single domain may appear manipulative.  Lastly, in my opinion, having a wide variety of links adds weight to the authenticity and relevancy of your site.

But of course I know that acquiring a diverse profile of links is no easy feat.

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