If you pay close attention to your favorites in IE or URL bar in firefox , you will notice that when you view some of the websites like google and yahoo , you will see their logo before the URL. So how did these sites manage to do this?. Simple, browsers look for a file called favicon.ico in the same directory as the current page or in the root of the website and they use this file as the icon. This was something that IE started supporting in IE 5.5 and how pretty much all modern browsers support it. It adds a nice touch to the small business sites making their bookmark or URL standout from the rest.
You will notice that there is an icon for my website as well. Here is how I made the favicon.ico online:
I first created a transparent logo from text using the cooltext website. I then saved this logo to my desktop . I then used the favicon.ico generating service to create the favicon.ico. Once you upload this file to the root of your website, all modern browsers will start recognizing it and showing off your icon in favorites and URL bar.