When I'm talking to people about search marketing and improving a website's rankings on Google, I often cover the importance of link popularity. As you can imagine, in my working life my words are often met with blank looks. Sometimes the looks stay just that, blank. Occasionally, when I'm doing my job properly the looks turn to ones of understanding, and often I'll elicit looks of pity. I sense right now that you have a blank look. Let's see if I can fix that. Link Popularity is quite a simple concept to grasp. Think about your website. You want people to visit it and a good way for people who've never heard of you to find it is using links from other sites, such as trade associations, local news sites, The Yellow Pages, etc.
This is also how search engine spiders find your site. It's reasonable to assume that the more popular your site is link-wise, the more times a search engine spider will arrive at it from a unique source. The more times a search engine spider finds your site via a unique source, the more useful a search engine perceives your website to be for it's users and therefore it gives your site a higher ranking in it's search results.
To see how many sites in the Google index link your type this in Google's search box:
For example to see how many pages that link to my site you would type this into Google's search box:
Link popularity is only a part of your overall search marketing mix, but it is vital. It's also important to get links from useful sites, not just your web design company! See this article for more details on Google's PageRank system: http://www.google.com/about/company/products/