If you are a webmaster, then you've probably submitted your website to several directories, you may even run one yourself. There are thousands and thousands of directories out there on the net and they all have their advantages and disadvantages. Good webmasters need to be able to evaluate these differences to assess what directories will be worth the time, effort and money to submit to.
Traffic
While all webmasters would like more traffic, and often have the goal of obtaining more visitors from directory submissions, the truth of the matter is that most directories don't bring in very many visitors. Even DMOZ, one of the largest and most popular directories on the web, brings in few surfers for many sites listed there. And other directories that spend several thousand dollars each month on advertising may only bring a few visitors.
Now don't get me wrong, sites in popular directories listed in a good spot near the top of popular categories many indeed see a nice amount of visitors, but this is the exception rather than the rule. But even one visitor a month is better than none.
SEO
The top search engines build rankings to a lesser degree based from on-page factors, like how many times your keyword appears on your page, or if the keyword is used with bolding, italics, H1 or H2 tags, etc. To a larger degree, search engines rank pages based on what the rest of the web has to say about them. This means that links to your website count as positive votes, and the anchor text in these links helps categorize the content of your page. If the rest of the web says a webpage is about a "miserable failure", search engines will take that strongly into consideration, regardless of what the webpage in question says it is about.
The main point being that directories provide webmasters with a way to vote for their own website by getting a new link. With respect to categorization, the downside with most directories is that instead of linking to your site with your keyphrase as the anchor text, they link to your site through the title which only provides some categorization depending on the title. Worse, directories sometime use the URL as the anchor text which provides no categorization benefit at all. But the absolute worst way that a directory can link out to your site is through a tracking-script URL which allows the directory software to count hits to your site, but provides no SEO benefit at all. The ideal case would be a directory that used a direct link with your selected keyphrase as the anchor text, but this is very rare.
One final SEO factor to consider, is the difference between floating text links and links that are naturally embedded within content. Search engines understand that natural in-content links may provide more accurate anchor text, and that floating links are often used with links purchased for SEO benefit. If you can get your anchor text link from within surrounding content text, that is the ideal case.
Saturation
Another factor to look at is the saturation of a directory. This simply means how full is the directory, or targeted subcategory, with other websites. If you take Google PageRank into consideration the idea of a link as a vote, as discussed above, becomes more complex. Really each page has a certain varying amount of voting power (PageRank), and this voting power is divided between all the links on the page. In practice, this means that if a link to your site is the only one on the page, it will get the most benefit as it gets the full voting power possible from the page. This is rarely the case, as there are usually multiple directory entries which all share the PageRank. If the directory has grown to 100s of links per category it has reached the saturation point and the benefit of being listed is diminished. So, the best time to get into a good new directory is at the beginning!
Free vs. Paid
Some directories are free, some require a reciprocal link and some require a onetime payment or a recurring payment. Yahoo's directory, for example, requires a recurring annual payment of $299. DMOZ is free, but many sites wait for years to be listed. One of the advantages of paid directories, is that the fact that they are not free, slows down the submissions, which in turn slows down the saturation of the directory. This factor can make a purchased directory entry a very worthwhile investment, these directories are often of higher quality as well, which makes them a better resource for users, which can make them a better source of traffic than junky free directories.
One thing to note here, is that you definately want to avoid FFA link pages. Free-for-all link pages are typically uncategorized lists of links that often require no administrative review for submission, this results in a spammy, uncategorized, saturated list of links that you really don't want to be associated with. So, in summary, take avantage of the quality free directories, but don't write off the paid directories if you are seeking to gain high quality backlinks.
Introducing SEOMA
Now that you are aware of some considerations for selecting directories to submit to, I'd like to introduce you to a new directory you may be interested in. SEOMA was designed from the ground-up to maximize the SEO benefit for listed sites. While most directories ask for just your URL, Title and Description, SEOMA also requests your desired anchor text. This anchor text is used exclusively to link out to your site, maximizing the benefit of the new backlink. And another optimized feature of SEOMA, is that if your anchor text appears within your description, it will automatically be hyperlinked on the custom detail page which is provided in addition to the standard directory listing. Your link will be the only outbound link on this page. So, you get a custom anchor text link from an on-topic category page, plus another custom anchor text link from a dedicated detail page for at least two outbound links per site.
Visit SEOMA
Mark is the creator of many popular websites including Money Talk and SEOMA.