Link exchanges are one of the most popular ways to gain links today, but the thing I do not understand is why people waste their time creating useless exchanges. If you are going to do a link exchange, then do yourself a favor and don’t make it obvious to Google by creating a “links” page and sticking your partners on there. The value to your partner from this will be abysmal at best, and will also draw the gaze of Google. People doing these types of exchanges are also more likely to back out of a link exchange without mentioning it, so make sure to check up on them to see that your links are still present.
So that’s the way most people do it, but what are better ways to create link exchanges? Well first start off by finding reputable sources in the same niche as you that work as complements rather than competitors. If you find them by searching for the keyword you are aiming for, then it would be stupid to expect an anchor text that will help you rank for that term. Do a search of semi-relevant terms, such as when I want links for my “online money making” website, I would look for people in the “paid surveys” niche as the content keywords will match very closely and I get great conversions on my survey products.
One alternative to a direct link exchange is a 3-way link exchange, which are somewhat better received by Google. These involve you linking to one site, they will link to another site, and that site will link back to you. For my time, these aren’t worth it simply due to the additional effort in coordinating two other people not to mention finding three websites in the same niche, with similar traffic and backlinks, that will work with you.
For bloggers, the link exchange world opens up even more. Links are the currency of the web, and as a result if you find a blog you like, then you can put them on your blogroll then post a few comments on their blog and see if they notice themselves. This is the informal form of a link exchange, because many times they will give you a link back, as a result you each have sitewide links bouncing between each other as well as related traffic. While I do occasionally get requests via email for link exchanges, I would prefer these informal gestures, and they are also what I do on my other blogs. By actually becoming friends with other bloggers in your niche you will find that blogging becomes more enjoyable, and based on game theory it will also be more profitable for each of you to work together.
Moral of the story: play fair with others and it will help your reputation, and if you do nice things online, then people will often be kind in return.