The situation: Your competitors have inbound links that are broken because of typos, changes in URL structures etc.
The common link building commentary: Most SEOs who’ve been around the link building block will tell you that it’s an opportunity to ‘build links’ for free – to pick low hanging fruit. Just drop the site owner a little email and voila – good as new. More juice for you!
The link-arms-race commentary given by sneaky [and helpful!] SEOs:
My name is John Doe and I’m writing because I ran into a few bugs while browsing your site. Namely, there are broken links.
It’s a shame that your otherwise use[less/full] list of sites in your niche should be hampered by broken links and that they’d slow your visitors [Googlebot, and myself my broken link checker] down. So I thought I’d point out those broken links I found for your [annihilation/removal/hexic cleansing].
[Insert list of broken links, first or second amongst which are the competition’s.]”
For bonus points:
Use Virante’s clever PageRank Recovery tool – based off the SEOmoz API – to find all the pages/links on your competitors’ site that are problematic like this. Hat tip to Rand’s post on 30 SEO problems and tools to solve ’em post.
This reminds me of similar tactics I came up with over 2 years ago in response to the common question, “Should I buy links if my competitors buy links?”
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