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I read a while ago, on this site, (sorry, can't find the link), that Google sees anchors with nofollow attributes as paid links and mentioned for affiliates. I thought that using a nofollow for external links is good and not harmful as Google sees it as a less valuable link.

I am confused and don't know what to think really. Can someone give me the right answer on this? Right now, I am using a nofollow on all my external links. Should I step off of this one?

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From Wikipedia:

nofollow is a value that can be assigned to the rel attribute of an HTML a element to instruct some search engines that a hyperlink should not influence the link target's ranking in the search engine's index. It is intended to reduce the effectiveness of certain types of internet advertising because their search algorithm depends heavily on the amount of links to a website when determining which websites should be listed in what order in their search results for any given term.

You should only be using nofollow on links that you do not wish to give "link juice to". This would be due to:

  1. It's a paid link and search engines do not want those links to influence the rankings of the pages they link to
  2. The link has not been vetted by you and may not be a quality resource so you don't want it to be be considered "a vote" as links are often used in ranking algorithms (links submitted with blog comments being a prime example)

So unless those links are paid links you should not be using nofollow on them. It breaks the ranking algorithms of the search engines. Additionally, not only does this not help you as just using nofollow for external links is not a positive ranking factor, but it can hurt you as external links can be a positive ranking signal.

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What is a paid link btw? So if I am correct, linking to Wikipedia, Google, Youtube and sites like this should not have a nofollow on them? –  Johan Jul 8 '13 at 14:19
    
A paid link would be an ad of any kind. It could be through an ad company, it could be a direct link paid for by a related website, or it could be a paid blog post with links in it. Anything where someone has paid to get content that links back to their site is a paid link. –  John Conde Jul 8 '13 at 14:23
    
Linking to sites like Wikipedia, Google, Youtube, etc, should not have nofollow on them unless you didn't create the links yourself. Since those sites can have user generated content under some circumstance you may want to use nofollow if you haven't vetted the link yourself. But the odds are you wouldn't need to use nofollow on them at all. –  John Conde Jul 8 '13 at 14:25
    
Hmm, thank you John. I appreciate your help. The links are not send by me, but by my users. Does that make a difference? –  Johan Jul 8 '13 at 14:27
    
That means you have no need to use nofollow on them. –  John Conde Jul 8 '13 at 14:28
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