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Should you optimize every page....dang right you should, and then add optimized pages like they are going out of fashion!
When less than 0.1% of people using SE's find you via your home page it is the day you should think about starting another site and doing it all over again...just MHO ;)
Welcome to WebmasterWorld!
Sites vary, but by and large each page should attract users on its own. That dramatically increases the number of keywords that you compete on.
Let me give an example. Last night I was shopping for a Brandname Model 123 Gizmo (I knew exactly what I wanted) and searched for that precise phrase. Every single result in the SERPs took me to that site's Model 123 Gizmo page, none to the index page.
The index pages were, presumably, optimized for Brandname (or even Productname, as most sites carried multiple brands). There is no way they could have been competitive with a page specifically optimized for Model 123 Gizmo.
Think in terms of pages, rather than in terms of the site!
sub directory pages = blue widgets, red widgets, pink widgets
product pages = round blue widgets from Peterson engineering, square blue widgets made by Widgetmania, straight blue widgets with wotsit partners, gay blue widgets with self taping screw threads, African blue widgets with spears
GrinningGordon, any Idea as to where I could get some of those African blue widgets with spears? they sound like fun!
Many people optomise their interior pages but leave out the link campaigns. I have found interior page inbound external links to be very valuable. Maybe it only offers a slight advantage, but it is an advantage that few take advantage of, thus making it more advantageous.
Don't underestimate this folks. I have a competitor with a budget of over $500k a year for their web marketing, as well as TV and print ads. With only one inbound link (with good anchor text) and some good on page optimization I am #2 on a search for their name/slogan - "I Love Widgets".
I am hoping that they up their marketing budget next year :) In the mean time I will be trying to get some more inbounds for that page. Maybe I can take #1?
WBF