Since the evolution of Link Exchange, this has been a serious topic of discussion among webmasters that whether swapping of links is beneficial or not. Let’s take a close look at Link Swapping . Starting from the very beginning in the mid 1990s webmasters and content writers began optimizing their sites for search engines. Initially the webmaster just provided information such as meta tags, and later on different SEO techniques started being used including black hat and white hat SEO techniques.

Link Exchange or Reciprocal linking between websites was one of these latter techniques and it is of prominent importance because Google uses link popularity algorithms to rank websites for relevancy. As it has not been proven yet that it should be done or not, we will consider its both Bad as well as Good aspects. So, talking about the Drawbacks of Link Exchange, some of the noticeable points of it are:-
Link Deletetion – Link Partners can delete another’s link from their site as this will decrease the count of outbound links from their site. This is one of the major drawbacks in doing link exchange.
No Such Guarantee – Swapping links doesn’t guarantee any form of search engine high ranking. In fact, search engines may often seek to devalue link exchanges. One way in which Google has tried to do this is to devalue pages named “links” (ie, domain.com/links). To avoid this webmasters have renamed their link exchange pages to Resource or web resource or something similar like these.
Penalize – Google can penalize your site especially if your site is linked to a site that is banned or penalized by google. So, some sort of care is required before doing link exchange. While exchanging links many of the things are there which needs to be taken care of like, it should be related with your website, it should not have numerous popups, it shouldn’t be like link farm with no other unique content, partner sites should not be casino or porn related, it should not have more than 30-40 outbound links on your link page, page from your link is coming should be indexed in search engine and it must have equal or more PR than your site.
And now some Benefits , as each coin has two sides similarly Link exchange has also got the beneficial part which is why it is a technique opted by almost every webmaster on their sites. Therefore the Benefits of doing Link Exchange are:-

Economic – While comparing it with Pay Per Click Model on Search Engines, Link Exchange is much cheaper source to get web traffic. It costs you nothing except the time to submit your URL and website details.
SERP Enhancement – Inbound links to your site counts as vote to your site, so search engine results tend to improve in impressive manner for sites that implement good link exchange practices.
Reliability and Stability – Reciprocal Links continue to give persistent traffic to your site as long as they exist.Thses links from your partner sites are really stable. In this overall process, sure you will lose some incoming or inbound links to your sites over time but they tend to stay indefinitely, providing you the traffic day after week after month after year.
Popularity - Swapping links between similar websites is the one of the very best way to engage in website promotion without spamming.
Brand Building – More links to your website means greater brand affect for your website. At least, it makes the surfer think that your site name seems to be appearing everywhere.
Outbound links doesn’t mean web traffic drain – A well-designed links page opens all of the outbound links in a new browser tab or window, leaving your site open on the user’s machine.
Asset to your website - A few bricks don’t amount to much but by piling them up you can get a rock solid structure. Similarly reciprocal links can also enhance the equity value of your website. These are like assets to your website.
Affordable - The traffic that comes from established networks is free but, earning those links is not. It takes time to build your network. But, once established will provide you all the above stated benefits. We hope this helps you consider the advantages and disadvantages of Link Building and Link Exchange so you can decide if it is right for you.