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1, What is a Keyword? Well this might sound quite obvious, as use of keywords goes right back to the start of the web, when developers used to cram in as many keywords as possible onto a page to get it ranked. Now it's not so simple, as Google's and other main search engine's algorithm (the formula that is used to ascertain relevance to a search query to the best possible page result) has become much more complex. But it's still true that keywords remain important, so your keyword is the word or short string of words that best matches the focus of your page content. An example of this might be 'deck chair' or 'cheapest deck chairs' now the trick is to get the best keyword that the highest number of people are using to search for the product or service you wish to sell. Another point here is that your keyword, if you are in a mainstream, or even increasingly some niche areas, is going to have competition. So for example, your keyword 'deckchair' will have many companies competing to get the coveted #1 spot for that search term in Google and other search providers. So for best results, we need a keyword that is very hot for the searches actually happening, and a variation that is a little cleverer so is still popular, yet with a little less competition.
2, How do I know what my customers are searching for? A very simple way, if using Google, is to look at the instant search feature, that will auto-suggest terms and alter the page results as you type. It's simple but the results that appear under the search box represent what people are actually searching for, so Google's interpretation of what is 'trending' for the search term you are using. You will need to make sure this feature is enabled in your Google settings. So if you search 'deckchair' you will see a few variations appear, these can be valuable for giving you ideas for your own keyword formation. Now if you scroll down to the bottom of the search results page, you will see that Google offers you a few other suggestions for your search, these are good clues to what is being searched around the product/ service you are interested in. There are other sites such as Wordtracker that have a free trial period that are quite useful if you have a n individual web project. Another couple of ways are to use AdWords keyword tool, you will need a Google account and then simply go through the process of setting up an AdWords ad and use the keyword tool, this will suggest terms and then can give you an idea of popularity of the keyword you have chosen. Google Insights is a website that will give you lots of information on what the world is searching for, and can show trends for search over a given time period and geographic location. You can compare graphically the popularity of keywords, up to five, so you can try things like singular term, 'deckchair' versus 'deckchairs' until you find a term that looks like it's a popular one with people making searches, further, you can drill down to regions in your country to show relative search volumes for the keywords in question.
3, Covering search term variations So now that we have found a decent keyword/ search term, we want to try variations, this may be covering geographical variants, i.e. 'deckchairs UK' 'deckchairs north west' etc. or we may want to try adding a characteristic, 'cheapest deckchairs' 'quality deckchairs' etc. It's not too difficult to get some very good variations, again use the tools above to ascertain whether it is likely that people are actually using the term in enough volume. Another really simple method for doing this is to put your simple hat on for a while, and think what would I type, be honest with yourself and ask yourself, what do I think the simplest term would be, then get that list and try it out. Ask non-work related friends what they would search for, the simplicity of the answers is revealing. You will find that many people will put in a geographic/ regional reference to their search, this makes common sense as for many services and products, they want to stay close to home, so cover the regional as well as national. If you are a very small player in a competitive market, say you sell software, then keywords will not achieve good ranking alone. Natural ranking for very competitive terms requires having the power of backlinks to your website, which is a whole different article. So if you do have small budget but work in a very competitive market, regional or even local SEO can be better, certainly until you get more capability to compete to a wider audience.
4, Short vs long tail search terms This just refers to the length of your search term, whether a short term or single word, 'deckchair' or long tail variant 'high quality darkwood deckchairs' the main reason for having the longer terms is that if you find good attributes and develop decent terms, you can get good ranking with less competition and claim a certain share of the audience as you have matched a common long tail search query, just something to consider and again, look for the auto suggestions from Google and others to give you clues.
5, What to do with your key words when you have them. So now that you have your fledgling bunch of keywords, you are going to want to put them somewhere. The thing to bear in mind here is to think with logic, because that's exactly how a search engine web crawler thinks (the virtual robot that scans web page content and puts it into a hierarchy of relevance and authority). Think what is my page primarily about? Now you place your keywords (sparingly) in the right places. So think Page Title, URL string for the page, H1 tag, body copy, image Alt tags. Don't forget page meta content, so place your page description with a main keyword present, add your relevant keywords to meta keyword list. These are the main areas to cover, and place new keywords relevant to each page into that page. Yes, there is work involved in SEO and the more you put into it, the better you will generally rank. A great idea for further improving your ranking is to introduce a blog to your website, where you develop stories and articles that have keyword content, again this needs to be well chosen and used sparingly. If your content is genuine to end user info wants and needs, it will enhance the relevance of the page.
I hope this gives you a few pointers, I have many websites that are very well ranked and keywords are definitely a large part of what I use to achieve that. Let me know how it goes for you.