Every once in a while Matt Cutts actually produces a useful video that provides usable information for the SEO community. The most recent video addresses the difference between how Google defines an authoritative website versus a popular one.

Summed up, it comes down to this: Popular websites will receive a lot of traffic and authoritative websites will receive links from trusted websites. The example he provides is that although more people visit adult sites, few people link to them. Government websites receive a lot of links even though they aren’t as frequently visited.

Take away 1: Google measures both popularity and the authority. Links remain a very important signal.

Google seems to use a cloud of anchor text in order to determine the theme of your site and this will influence your rankings in the search engines. In the upcoming year, I would expect to see more themed based divisions so that sites that the true authorities of the market can surface to the top.

Take away 2: In order to know how Google sees your site, go to your webmaster tools and click on: “Links to your site”, followed by “How your data is linked” in order to determine the words used to link back to your website. Google uses this word cloud to determine the relevance of your site so if you want to rank as high as possible, make sure to optimize your incoming anchor text to properly reflect the overall theme of your site.

After that, it’s just a matter of getting the on-page elements right and a few good links!