Currently, I am not doing that. However, in the future, to promote my website, I may. Though, I believe that the best way is to find groups of people who will promote your website of their own free will.
I think giving people something to use rather than just a text link benefits you more. I think it is better to give the option to post a banner or button.
That depends on the site. Personaly i have a directory and when i want someone to add my directory in his site that contains a big list of directories i prefer a text link. In that case it would be easier to submit your sites. If everyone had a banner 1. It would take a lot time to load the page and 2. It would be more difficult to submit to all those directories.
I think that using a banner will be good when it fits to the site.
I do agree with Geoserv though in the fact that offering banners/buttons to link to your site may help promote it. Because, some people like displaying pictures rather than words.
Yes but having a lot of links in a page and all of them are banners there will be two problems. First it's hard to have them all suit your theme/skin/style and second it will be more difficult for visitors to see them all. It depends on the site and the ammount of links. That's my opinion.
Yeah... I have a couple, but its not really all that important to me. I realize getting traffic is a vital thing, but I dont see it as being a top priority. Maybe it would be more useful for those sites with little traffic. Then again, big sites do it too (myspace etc)
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