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In the following typical examples, do SE's only use the word "bed" as well as the word "breakfast" and ignore "and" as well as the "&" character?
bed and breakfast
bed & breakfast
Now if you check Alta Vista for the two searches, you'll see they go for a literal match -- most likely part of their linguistic programming -- and the two SERPs are very different. The result here is 1,100,000 returns for "and" and only 1,000,000 for "&".
It's an interesting question, and one that drives me crazy, because I have a client with an ampersand in their name, and they're very sensitive (from a branding perspective) about spelling out the word, even though that happens all the time.
One limitation is trying to optimize by using the ampersand in an alt tag attribute. Netscape and Explorer require different codes to make the visible fly-out boxes read correctly. So I only use the spelled out "and" in alt tags.
At any rate, I suggest running your own experimental searches on various engines for the phrase you want to rank on. There's a lot to observe.
BTW, I saw one title that said "bed & and breakfast". Fear of commitment!
Edited by: tedster