When a link to a webpage is included in a piece of content, the anchor text provides a context for the link and helps search engines understand the relevance of the linked webpage to the content. For example, if a webpage about hiking trails includes a link to a webpage about the best hiking boots with anchor text that reads “best hiking boots,” search engines can understand that the linked webpage is relevant to hiking and potentially rank it higher in search results for relevant queries.

In addition to helping search engines understand the relevance of a linked webpage, anchor text can also affect the ranking of the webpage in search results. If a webpage with a high authority (such as a government website) includes a link to a webpage with anchor text that includes a relevant keyword, it can help boost the ranking of the linked webpage for that keyword. This is because search engines place a high value on links from high authority websites and use them as a signal of the quality and relevance of the linked webpage.

However, it is important to use anchor text responsibly in order to avoid being penalised by search engines. Spammy or irrelevant anchor text, or overuse of exact match anchor text (using the exact same keyword as the linked webpage) can be seen as an attempt to manipulate search rankings and may result in a penalty. It is generally best to use descriptive, natural-sounding anchor text that accurately reflects the content of the linked webpage.

In summary, anchor text is an important factor in SEO because it helps search engines understand the content and context of the linked webpage and can potentially affect the ranking of the webpage in search results. It is important to use anchor text responsibly in order to avoid being penalised by search engines.