I realize I am playing both sides of the fence here, but directories are getting a bad rap. Directories in and of themselves are not necissarily bad neighborhoods or whatever, but what some people call directories, and some of the stupid or greedy things that people are doing with directories are making them match the profiles of scraper sites and other sites search engines would not want to index.
Not too long ago a person launched no 2 or 3 but 5 different general directories using the same linkage data. Well that is probably an example of the types of things to avoid.
Some directories have 10,000 pages and only 300 listings. Duplicate content filters are not going to want to keep that site in the index.
Some directory owners build all their link popularity from other free directories and forum signature files. Some directories have no quality standards and do not even properly categorize the sites. Others fail in both categories: inbound link quality and outbound link quality.
Many directories sell sitewide pharmacy or debt consolidation links. In doing that they parse out a ton of their link popularity, which means less of their pages stay in the search index, the lower category pages have less value, and there is less reason for search engines to want to trust any link from that site. When you sell lots of off topic junk the site becomes ghettofied and the path the site must go down is chosen.
If you believe in the good link vs bad link algorithms some engines may have then it would make sense to steer clear from most the sites that excessively exhibit many of the above characteristics, but not all directories are built that way.
Many directory owners do not try to be unique and market their position with anything other than raw PageRank. The more a directory looks like a discount PageRank brokering service without quality standards the more likely search engines will be to want to discount the sites.
We the pundints, us with blogs, and spare times to chat on forums, need to have something to talk about. So we raise an issue up and the knock it down and then hunt on the prowl for the next issue to talk about.
Everything comes and goes in waves like that as the algorithms evolve.
When people talk about directories dying they are stating that algorithms are moving away from them more and more, but for a significant period of time the ROI on directory listings was absurdly great. Even if it drops off somewhat the search engines still have to trust something. In many industries outside of a DMOZ and Yahoo! Directory link there are less than a handful of sites worth trusting. How do search algorithms rank sites in those kinds of industries? They need to trust something.
Even if Google was not placing significant weighting on directory links I still would use many of them for how they work in the other search algorithms, but with that being said it may also be worth looking more into other sources of link popularity as the business model of junk general directories is dying.
I think the business models that will work the best longterm will be those that have a strong social position in their marketplace, those who can afford to advertise a ton, those who can get media coverage, or those that naturally pick up the random citation on random blogs and community driven sites that provide many random unrequested links. Not every business fits in those groups though. The end goal should be to figure out how to get in those groups, but until placed in those groups we do what we have to to get by :)
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