Anchor text is the text you see displayed over a link.

Example of a link with no anchored text:

http://www.ici.ie

Example of a link with anchored text:

Executive Life Coaching Services in Dublin

You can see that the second example gives information about the content of the destination. It helps the search engines accumulate information about content on the destination page.

By the way, that's why anchor texted links from other websites to yours are valuable - they reinforce your website's "ownership" of the subject.

Tags: anchor text, inbound links, links