Exchanging links was once a viable link building tactic. A website would give you a link with the exact anchor text you wanted, you’d do the same for them, and everything was hunky-dory with the world. That was well and good as recently as a couple years ago, but to do that today shows a stunning lack of industry knowledge. Please, if you’re exchanging (bad) links as part of your small business SEO, stop before you get penalized.
Before I go any further, let me specify a bit. Exchanging links with a site that has good page authority, unique content, and is relevant to your business is still a good idea. You don’t want to base your entire strategy around it, but a few choice links are good for all parties involved. When we say crappy links, we mean the link farm email spam that people still send out every day. Here’s an example from our own inbox:
My name is Holly Robertson and I was wondering if you are interested in exchange links, I’ll place your link on my sites exactly here: hf-management(dot)com project2012live(dot)com If you agree please send me your site details: Title: Url: I’ll place your link in less than 24 hours, then I’ll send you an email with my info.
Seems like a reasonable offer? Well, we have no idea who Holly Robertson is or how she got our info, but she is performing link farming in the worst kind of way. If you go to one of the sites she offered a backlink from (Project2012live dot com) on the surface it looks okay. They have a blog with SEO relevant articles and a clean (if ugly) wordpress theme.
So what’s wrong? The main problem with this offer is that the site is a penalty waiting to happen. None (zero, zilch, nadda) of the content is unique. Do a quick Google search for any phrase on the site and you’ll find it from a dozen other sites on the web (most of them also spammy). Even if you gain a tiny boost from exchanging links with this kind of offerer, Google will soon penalize the site, and then all you’ll be left with is a toxic link you need to track down and eliminate. 
What ELSE is wrong? As you can see if you viewed the site, the links are listed in a big chunk on the sidebar. This is quintessential link farm behavior and Google is too advanced for it to last for long. Also, take a gander at the image to the right and see some of the quality links you could be listed alongside of.
That’s right, you could be listed right above “Chinese Rosewood Furniture” or “iphone 5 jailbreak.”
Honestly, I feel a little bad for some of the companies on this list. Some of them are probably going on bad information and honestly thought they could enjoy long-term success by exchanging these links. Certainly we can’t expect every seller of “CHINESE ROSEWOOD FURNITURE” to also be an expert on SEO.
On the other hand, the SEO companies on this list should be embarrassed. If this is the kind of link building they’re performing for themselves, we can only imagine the demented hellscapes where they are listing client links.
In conclusion
If you get offered an opportunity to exchange links with another site, your default response should always be intense skepticism. Most of the time, these link exchange offers should go right in the spam folder. Honestly, this is probably obvious advice to most of you out there, but SOME companies still must be falling for it.
Please, don’t let it be you.