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Should I focus on the less competitive keywords first, even though they have less traffic?
I would focus on optimizing the words that generate the type of action you want, not on whether they are competitive or not. If they are competitive and you simply can’t rank on them organically, think about adding these particular words to your PPC program. It’s good to remember that it's not about loads of traffic, it’s about getting people to do what you want when they get to your site. Keywords can be the best indication of the user’s intent.
Then after you have optimized these keywords concentrate on building up your PR with quality sites and keyword-rich link text.
Hope this helps a bit
PR is only a matter of links and it does not mean that your competition is getting targeted traffic which is what we all want at the end. Also, lately Google seems to be giving less importance to PR as there are way too many link pirates around selling unworthy links. It appears that G is going now for what is called Latent Semantinc Indexing. [javelina.cet.middlebury.edu ]