No-follow links are those links which have the HTML attribute of “nofollow” and can be seen simply by right-clicking on a text link and selecting properties. If you are using Firefox, the little window will display several characteristics for the link. One of them is called Relation. If you see a nofollow after it instead of external, the link you just checked is a no-follow link.
This attribute has been pushed hard by Matt Cutts in an attempt to scare webmasters into conforming to Google’s standards. He wanted those webmasters who sold text links on their sites to add “nofollow” to all their paid links thereby preventing them from passing “link juice” or PageRank. Google would treat these links as untrusted links so no PageRank or anchor text value would be passed. Understandably, the use of paid links skews the Google ranking algorithm towards the site owners who have money to invest in site promotion versus those who don’t.
There has been much confusion with webmasters “guessing” at how the various major search engines (Google, Yahoo, Live, and Ask) treat these sort of links. Many webmasters believed that the use of these links caused the links to literally be “not followed” or indexed. Now, for once and for all, Loren at Search Engine Journal has laid it to rest by getting the search engine’s nofollow treatment straight from the source – the search engines.
His findings are summarized well in a chart:
I find it interesting that Yahoo displays nofollow backlinks from sites in Yahoo Site Explorer but doesn’t count it towards search engine ranking. Live Search has not offered any information on this topic yet.