Anchor text is defined as the words that make up an active hyperlink. When you place your mouse curser over an active link, some text will appear for your to read.
Take this example of a ficticious jeweller’s home page text
"No longer just a jewellers, Mills and Wicker boast a wide selection of traditional and contemporary jewellery, silver giftware, writing instruments and some of the most beautiful wedding rings and engagement rings"
The above example the active hyperlinks, shown in bold, would display “contemporary jewellery from Mills and Wicker” and so on.
Search engines gather their data by sending their spiders and crawlers around the web using hyperlinks links and jump from page to page and website to website.
Hyperlinks are the lifeblood of a search engine and are used as key indicators for identifying the topics of the pages they're about to go to.
If 100 websites link to a website with the link "contemporary jewellery" or similar words, the search engine can be fairly confident that the website is about contemporary jewellery.
To use anchor text effectively you should always use well formed hyperlink as shown below.
<a href="http://www.jewellershop.com" title="Contemporary Jewellery from Jewellers Shop">Contemporary Jewellery from Jewellers Shop</a>
The above example starts with the <a> tag, shown in red, and this indicates the start of a hyperlink. Link tags can contain images as well as text, and allow users to click on something and move to another web page.
Next, the link referral location, shown in green, tells the browser (and the search engines) where the hyperlink points to. In the above example, the URL http://www.jewellershop.com is referenced.
Next, the visible portion of the link also known as “anchor text”, shown in blue, describes the page the hyperlink is pointing at. In above example, the page pointed to is about Contemporary Jewellery from a jewellery shop called Jewellers Shop, so the link uses the anchor text “Contemporary Jewellery from Jewellers Shop.”
Next, is the title tag, shown in purple, and is optional. The use of the title tag helps screen readers and programs acting as visual aids describe what a hyperlink on a web page is about. As shown in the example, you can place the same anchor text inside the title tag.
Finally the </a> tag, shown in red, closes the hyperlink so that the rest of the page will not have the link attribute applied to them.
In order to rank for a particular keyword that is particularly difficult, such as “contemporary jewellery” be sure to focus on getting the keyword inside your anchor text. A variety of techniques are shown below.