There is a large website that wants us to advertise with them, but they only allow jpegs for their site not text link ads. It is a link that will be going to a subpage but is specific to a region, will having an image instead of text decrease the value of the backlink?

anybody?

Image links tend to be valued slightly lower than text links. However, if you fill out their alt tags with your keywords, they'll also be beneficial to your rankings.

Ya I found a site that is pretty specifically related to what we do has a PR5 and we are doing a site wide link with a simple alt-tag so hopefully it works out okay. Thanks for the advise guys.

Not at all. Please note, however, that web bots easily identify site-wide links as advertising so such links may not be very effective for SEO purposes. The link can be useful as a source of traffic though.

but several of my competitors have large amount of site wide links and it seems to be working okay for them to get up high on page 1. So while they probably know it is advertising, you would have to get some credit if it is an industry related site with a high PR. Don't you think?

It's necessary to analyze all (or at least most of) their backlink sources and figure out what the proportion of sitewide links is. If you'd like to discuss your campaign in more detail, please send us your main keywords and the URLs of the websites you are competing against.