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You have to know if your ideas have enough popularity and relevance to be an attractive target for traffic. Assume that you can get between 1-5% of the keyword numbers reported by Overture or Wordtracker and then decide - would it still be worth it? When the answer is yes, you've got a winning project. We also use the keywords to know what to target in our pages and our linkbait marketing efforts - generally if we think the idea is good enough, we'll ignore the competitiveness level and shoot for the moon, i.e. the highest trafficked, most popular term/phrase in the sphere."
I don't understand these part:
"Assume that you can get between 1-5% of the keyword numbers reported by Overture or Wordtracker and then decide - would it still be worth it?"
Can you explain me pls?
On higher trafficed terms... can you create a site capable of challenging the already existing sites and draw 1 to 5% of their traffic? ie: 10,000 to 50000 hits on a 1,000,000 hits a month term?
Those are two extremes. In extreme number 1 there is likely little competition. In extreme number 2 there will be 100's of sites competing.
If you start out shooting for the moon you'll likely quickly realise that you simply cannot corner the heavily competitive market. Shoot too low and you'll do well but the ceiling is very low.
Find a happy medium or even better create a site with content that you are passionate about and ignore the figures.