A very interesting question! Let's first define link cloaking... a standard link on a Web page looks like this:

With a link like this, you can simply move the mouse over the clickable text and the lower left corner of your browser should tell you where you're going to go if you click (try it here: put your cursor over these words). Sometimes, however, these links can be crazy-long which can make them ugly and difficult to work with, and othertimes you just want to mask the destination so you might use something like

where you then have a lookup table that says 33=URL. Someone clicks on your masked or cloaked link and they get whisked away to the destination, but they'll never find out what the destination actually is without clicking.

Is this good? Well, rather than just give you my perspective, I asked a few of my friends and colleagues why they do (or don't) cloak links on their sites. First off, though, I believe that cloaking is a disservice to your readers because when they hover their mouse over a link, they can't see where they're going to go once it's clicked. Further, from a search engine perspective, cloaking links also means you can't help other sites gain visibility, so that's also a consideration.

But other people clearly have other views. Leo Notenboom, who runs Ask Leo, shares this perspective:

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I do sometimes have mixed feelings, for both the issue you raise, and the uncertainly of any outgoing link-love I may, or may not, be generating by cloaking links. Typically if I put a link that I specifically want to make sure gets 100% link love, I don't use my redirector.

I use it for two reasons:

1. click tracking - the backend of my sql version lets me report on clicks.
2. ease of change. Best exemplified by the following story: there was an almost canonical list of Windows XP Services with descriptions and recommendations put together by a guy known only as "Black Viper". It was great, and I linked to that page from several places.
   
   Then two years ago his site disappeared. Without warning.
   
   So, I changed my redirector to point to the archive.org copy of his page, and then later to a MajorGeeks.com copy. With one small change all those redirected links on my site were now pointing to the same information elsewhere.
   
   Then last month he, and his site, came back. Moments ago I restored the pointer in my database, and all those links go back to him.

I expected that as sites disappeared from the internet I might end up changing pointers to go to my own "explanation page", but I've not done that yet. Being able to hit archive.org was pretty cool in this last example, because it was, and is, such a popular collection of information.

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Another voice: Greg Bulmash, who runs the slick Fundraw and Brainhandles sites, has his own list of reasons why he likes link cloaking systems:

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1. Click Tracking
2. Short URLs with your domain name on them. Useful for e-mail newsletters.
3. Trying to prevent affiliate link hijacking.

I don't use them, myself. But those are the reasons I understand people use them. Also, remember the 500words fad? Some of the people doing the whole 500 word thing used jump links, so the link from your purchased word travelled through a cloak to get to your site. In that case, the general consensus was that it diminished the value of buying words there because you didn't get any SEO value from the link, just the clicks.

And there is the element of hiding the destination from the users, but I think that's a minor point.

There may be a percentage of your users who care whether they're getting an accurate URL in advance of clicking to it, but when a portion of your traffic comes from people who type your URL into Google to get to your site, I think you may be overestimating the size of that percentage.

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Popular writer Cathie Stucker who runs the site IdeaLady.com uses some link cloaking herself because, well, I'll let her explain:

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I tend to cloak some of my affiliate links. One reason is so people do not just chop off my affiliate ID. But there are two other reasons:

1. I use links that are simple so they can easily be given out verbally. If someone calls me on the phone or asks me a question in a seminar, I can easily give out the affiliate link. ("Where should I go to set up a web site?" "http://www.MyFavoriteWebHost.com/") That also works for something that will be in print, such as in a book or column.
2. If my recommendation changes (i.e., the merchant goes away or their service deterioriates) all I have to do is change the forwarding. Even if the recommendation was put in print three years ago, it can always be good.

I do not use a unique domain name for each affiliate program. Sometimes I just redirect through a page on my site. But I like giving some of them their own domain names...

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Clearly, like anything else, there are pros and cons, but Leo, Greg and Cathie have interesting thoughts on the subject!

What about you, dear reader? Cloak links or leave 'em all transparent?