Canonical URL tag vs. 301 redirect

This is relatively new introduction from the major search engines - Google, Yahoo! and Live/MSN.
The purpose of canonical tag URL is to tell the search engines that the page it’s ascribed to is a copy of another webpage, and that all the search engines metrics should be passed/applied to  the canonical (original) page. Confusing? Ok. Let’s consider an example.

Suppose you have a page on a subdomain http://page1.youtsite2.com/index.html that copies exactly the content from a page of the root domain http://www.youtsite1.com/page1.html. Now, if you leave it as it is, you’ll get penalised for duplicate content.

Previously, to rectify the problem you would setup 301-redirect in .htaccess file, but that requires some skill and also have certain disadvantages. Now, instead of setting up the redirect, you can just add a line to the html header of the duplicate page:

<link rel="canonical" href="http://www.yoursite1.com/page1.html" />

This would tell the search engines that the current page is a copy of http://www.yoursite1.com/page1.html and that all the ranking/link metrics should still be applied to http://www.yoursite1.com only.

Despite the similarity between canonical URL tag and 301 redirect, there are also differences:

• As opposed to 301 redirect, canonical URL tag does not transfer traffic to the canonical (original) site
• 301 works across different domains, whereas canonical URL tag operates only on the same domain.
• 301 is a much stronger signal of a duplicate content page, while the canonical URL tag may in some cases be disregarded by SEs.

Please refer to the original article Canonical URL Tag - The Most Important Advancement in SEO Practices Since Sitemaps on seomoz blog for more details.
This post is just a short recap of the aforementioned article.

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