How Google works

Millions of people use Google or any other search engine to search their relevant material. Some of these people might be potential clients looking for your particular offering. There are two ways for you to show up on the results page when users are doing a search. The first is paid advertising and the second is “organic” (or “natural”) search. The natural search results are based Google search algorithm.

Google’s algorithm is quite complicated and tricky, it is:

Search Ranking = Relevance * PageRank

Relevance is basically the measure of how your website (or more accurately one of your web pages) matches the search phrase the user has entered. Measuring relevance is a relatively sophisticated process, but it boils down to some fundamentals like the title of the page, words on the page and how frequently they occur

PageRank is an independent measure of Google’s perception of the quality/authority/credibility of an individual web page. It does not depend on any particular search phrase. So, assuming that two web pages have the same relevance – then whoever has the higher PageRank gets the better ranking – and shows up at the top of the results page.

How PageRank Is Calculated

PageRank is primarily determined by how many other web pages are linking into you. Google considers this kind of inbound a link a vote of confidence.

But, here’s the trick: Not all inbound links are created equal. Web pages with more credibility that link to you have more “value” to your PageRank than those with less credibility.

That is if your web page is having almost 20 inbound link from website ABC (having PR of 3) is equivalent if your web page has one inbound link from a web site having PR 8.
I have summarized my understanding in this article; you can read more details on inbound marketing from here. I have already written about need of inbound marketing on my blog.