Contextual links are links that are embedded within the textual content of a page. That is one of the requirements for a natural link, which is preferred by search engines.
The difference between contextual links and other links is that they are part of an article and are not a separate list of links found in a sidebar or footer. While lists of links are not favored by search engines because they frequently have no relationship to the theme of an article, good contextual links are directly related to the theme.
These types of links are commonly found embedded in articles on news sites, Wikipedia pages and on a large number of pages that have been optimized for search engines. They are used to reference additional information about a topic or a keyword phrase. The word “contextual’ means that the word or phrase is dependent upon the content. When the link is part of the text in an a article focused on a specific topic related to the theme of the receiving page, the link becomes a natural link. When it is part of an article on a site whose overall theme is directly related to that of the receiving page, it becomes a quality link, which is a type of link preferred by Google and other major search engines. The links found in the previous sentences are examples of contextual links.
A well-structured link helps to reinforce the keyword them for a receiving page because the words used within the hyperlink text are typically directly related to the keyword theme of the receiving page. They can be used internally to reference additional information about a topic, or they can point to a page in another web site.
When working on your link building strategies, try to focus on building contextual links from sites that are leaders in your related industry. That can sometimes be accomplished by offering your services as a guest author in exchange for adding a link within an article that you write. Another option is to find an online forum that focuses very strongly on the the theme for your web site and write tutorials about your chosen topics. If you have a web site about cats, look for other sites about cats or online forums that focus on cats.
The key to making links work is to always try to seek links from sites that already rank well for your targeted themes or are known leaders in your industry. These sites are very strongly themed for your topic and will offer the highest value. The types of links that will not have much value are those from unrelated sites, site that do not show up in search results, and sites that have no specific theme or are a collection of unrelated articles.
If you are buying links, be aware that Google is actively targeting sites that sell links as well as sites that purchase links. That means that you should never buy a link on a site that is obviously selling links. Whenever you purchase links a certain amount of discretion is always wise.