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An example might be a company the builds custom leather automotive interiors.
Core terms like "custom car seats" or "leather car seats" won't produce a ton of traffic, but the conversion rates for these terms will be extremely high. On the other hand, a term like "sports cars" may generate a large amount of searches, and sports car enthusiasts may be the type of people who order custom leather car seats, but the majority of visitors coming from that term will be looking for something else and will leave quickly. This results in very low conversion rates.
When you go after too many terms, the low conversion rates of the broader, less relevant terms off-set the conversion rates of the core terms. The result is the client ends up paying far more money than necessary to get the same basic amount of sales. Since the costs involved with SEO in terms of man-hours is basically the same, (regardless of the conversion rates of the individual terms), going after too many terms can easily produce an initial negative ROI.
SEO marketing isn't about volume. It's about attracting a better quality visitor. I personaly don't think there is any particular product or service that can come up with 1000 truly relevant terms.
>>IMHO the highest searched terms, or the "core terms" are seldom those with the highest conversion rates.
I completely agree with the exception that I don't consider the highest searched on terms to be "core terms." Your core terms are the ones that most accurately describe what the product or service is. Using your MP3 example, "buy MP3 player" or "MP3 player" would be the core terms. MP3 would be in the same category as the "sports cars" exampled I used. The key is to start from the center and work outward. The difficult part is determining how much time and effort should be spent on the broader terms.
>>We go after everything becuase we dont what is going to achieve the rankings to create the traffic.
Actually, if you spend enough time crunching all the numbers, you can usually predict with a great deal of accuracy which product/keyword set will produce the best bang for the buck. If you break all your products down into indiviual keyword sets or themes and then look at things like:
1. Predicted search activity for each term
2. Combined search activity for each set
3. Number of competing pages for each term (across mutliple engines)
4. Percentage of terms within a given set that have multiple ocurrences of low competitive page counts
5. Percentage of terms within each set that produce a high level of directory matches.
6. The overall level of competitive optimization for each set.
If you take the time to answer all these questions, you can structure a modular program that prioritizes the various products by predicted ROI. Going after the keyword set that contains the greatest number of overlooked, yet frequently searched on terms, helps you effectively manage the client's perception. Quick initial results that bring in new traffic almost always makes the client much more willing to make the long-term commitment necessary to go after the more competitive phrases.