Anchor text sends direct relevance signals to search engines about the linked page topic. A natural backlink profile distributes anchor types: 30-40% branded, 25-35% generic/naked URL, 15-25% partial match, 5-15% LSI/semantic, and only 3-8% exact match. Over-optimizing with too many exact match anchors triggers Penguin algorithm penalties. Internal link anchor text is equally important — use descriptive keyword-rich text for all internal links between your own pages.