The first thing you need to know about backlinks is they are an essential part of the game when it comes to achieving high rankings on Google. Google has set parameters into play when determining page rankings that have to do with how many inbound links you have from various sources. Each page has to have at least one link from another website. If you have ten websites that all have backlinks from the same niche then Google considers your site as one that receives ten different links from ten different sites. This can make your rank appear higher and actually depend on the number of backlinks that Google sees coming into your website.
Backlinks, however, are not the only things that Google uses to determine website rankings. You will also need to meet a certain minimum threshold to begin seeing website rankings that will boost your income. I say income because there are other factors such as the keyword segment that you are in as well as other important aspects of the site. There are ways to bypass this requirement, but if you are looking for a long term solution to improving your rankings in Google, backlinks will not do it for you.
One important thing that Google uses in their rankings segment formula is the quality of the backlinks. They use anchor text to determine if the backlinks are quality or not. If an anchor text looks spammy or unnatural, the algorithm will deem it unworthy of any attention and not count it as one of the backlinks coming into your site. This, in effect, lowers your website rankings segmentally and will never increase it.
If you have ten backlinks coming into your site from an affiliate program and the number doesn't increase even after three months, then chances are you have a problem. The answer lies in the link wheel and what it has to do with page ranking. Google uses the average pagerank of each web page when determining how high a page is to rank it for a specific keyword. So, if your site has a pagerank of eight and the number of incoming backlinks only increases by one, that means that your backlinks are not quality and the search engine doesn't value them as much as it does the other pages. With this, one should avoid backlinks from affiliate programs unless they have a very high page rank.
The link wheel was introduced in 2010 by Matt Cutts. It is basically an algorithm that Google invented to rank all of its web pages. It works through different factors including the number of backlinks coming into the site, the average rank keywords segment it falls in, the anchor text used to link to each page, and even the domain name that the links point to. By analyzing all of these factors, the Google algorithm can calculate the best overall 'weighted' link that would be best for that particular search result.
Backlink analysis also involves a lot of data collection. Data such as the average rank keywords segment it falls in, the most popular backlinks coming into the site, and even the domain names that the backlinks point to. For example, if there are several thousand pages that are ranked in the top ten for the keywords "running shoes", Google might want to collect information on the following keywords, "running", "athletic", "tennis", and "shoes". It would then calculate the probabilities that a user searching for that phrase would find an anchor text related to that. Google's goal is to make its results as unbiased as possible, so as to eliminate bias in its rankings.
The second thing that Google does is compare the keywords related to that anchor text with the average search volume for that term. If the keywords is a popular search term, Google would assume that the traffic is also a good amount. So, by using the above example, the higher the keywords segment (running shoes), the higher the search volume and therefore the higher the rankings. This is how Google ranks a site.
So in summation, the stream is one of the ways that Google works to improve its rankings. Google is looking to have a lot of relevant backlinks coming into a site. Backlinks are important because they help to establish authority, and they increase the link popularity of a site. However, it is important to remember that a backlink will not move a site ahead of other sites that may be more popular. Instead, they are used only to direct a visitor to another page on your site that may contain more relevant content.