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An algorithm is a complex mathematical formula that search engines use to assess a website’s on-page factors and off-page factors.
In order to determine the relevance a website or page has in relation to a keyword or phrase, search engines "spider" or crawl millions to billions of web pages across the internet. Based on the values returned from this crawl (i.e. keyword density, number of links, anchor text, etc) search engines place specific websites and web pages in order of relevance to the user's keyword query
Search Engine Algorithm
How Search Engine Algorithms Work