It’s faddish these days to walk around saying, “Directory links are worthless,” or “Directory links aren’t that effective for SEO anymore.” I don’t know where the people who seeded this myth (or the parrots who repeat it in lockstep) came from, but I know how to make them flip their opinion straight away. By using logic.
Recently a colleague of mine was looking at a client’s backlinks in Google webmaster tools and noticed that about 20 of them were coming from a single directory submission to directory name removed to preserve its effectiveness*. I had included about 20 tags when I did the directory submission, and Google had indexed and cached each page that was created in the directory via tagging. The fact that Google spiders this directory often and felt it was important enough to show as 20 backlinks to a site in webmaster tools would indicate to a rational person that Google trusts this directory a great deal.
Yet there are still people who like to make the generalization that directory link building is dead. Why? Well, the generalization seemed to begin after it became clear that Google was on a crusade to torture directories that sold links. When Google feels like it, it will go to a random directory that sells links, knock down its PageRank, decache half its pages, and make sure it doesn’t rank for its own name.
The fact that the only way Google can handicap the power of a directory is to manually punish it should indicate to a logical person that directory links must carry weight in the algorithm. And based on what we know about the algorithm, the links should carry weight. Google likes links surrounded by similar links, and that’s the essence of what a page in a web directory is–it’s just a collection of links surrounded by similarly-themed links.
Google can’t just devalue all paid directory links in the same way that it can devalue, say, sitewide links because directories don’t leave footprints that the algorithm can discover on its own. As a result, the only way Google can reduce the effectiveness of a directory link is to manually visit a directory in question and punish it. Therefore, Google only punishes directories that sell links to a.) create the public perception that buying directory links isn’t effective anymore and b.) rob directories of power in the only way it can–through manual penalties. Ergo, broad sweeping generalizations like “directory links are worthless,” have no place in civilized culture.