Link Exchange or Link Building methods are mainly centered around quality and relevancy. The sites with which the links are being exchanged, should be the established ones, with a high PR and good incoming links. They should be in the same niche as your own site. For example, if you own an insurance site, then you should target to swap links with motor insurance, personal insurance or financial websites.

The following steps need to be taken for an effective Link Exchange Campaign:

Do a Diligent Research for Right Keywords: The selection of the right keywords, which can help the web users find your site is very important. For this purpose, you may start with a generalized list of keywords which are related to your website, and expand the same with the keywords related to the same category. If you have an insurance site, the most relevant keywords for you could be motor insurance, auto insurance, personal insurance, general insurance, finance, personal finance, financial websites etc. There are several keyword research tools, to help you build up your exclusive list of keywords.

Searching for prospective Link Partners: The easiest way to look for good related link partners, is to run a "search" on major search engines such as Google, Yahoo, MSN etc using different keywords. Don't focus on just the first page, coz the sites already appearing on the top pages, may not be interested in exchanging links with you. You will get the best results from the sites appearing on the deeper pages

Shortlisting the right Link Partners: After compiling a list of sites related to yours, it is time to discard the useless ones, and concentrate on the good ones. Incoming links from .gov or .edu websites are better than getting links from the sites which host free of cost. Don't concentrate on just the Page Rank of the prospective link partners, although it is also one of the main factors which affect the rankings of your site. Also never link to the dubious sites and link farms.

Sending out the Link Exchange Requests: Before you send out the requests for links to the prospective link partners, it would be better, if you set up an Resources Page or a Links Directory. And don't forget to mention the exact location where you would be putting up their links, while mailing them. Likewise do mention your own anchor text, the url to which the anchor text should point to, and the brief description of your website, preferably not more than 250 characters.

Effective management of the Link Exchange Campaign: After your link is live on the other site, it is very important to monitor that the link does not get deleted, and remains permanent with the correct anchor text and the accompanying description. There are several tools on the internet, some of them absolutely free of cost, with which you can monitor the incoming links to your site. One such tool which I have been using for over three years is the "Web CEO". It is a very compact tool for doing the Keyword Research, Finding Prospective Link Partners, Managing Correspondence, Monitoring the Incoming Links and lots of other features.