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Find keywords... with 3000 or more searches per month, $1 or more average CPC
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A keyword may have a high bid in AdWords and be easy to rank organically, or vice versa. Also the AdWords tool can over-estimate demand considerably. It doesn't hurt Google for people to think that there are thousands of searches each month for terms they want people to bid on. What I'd look for is a keyword group where there are lots and lots of related terms that show decent interest.
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check the first ten websites... to see if they rank 0 or 1
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PageRank is something to consider when you look at a website, but don't trust it too much. A site with low PR can outrank a site with high PR.
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Once you find your keyword(s) combination, create a domain or blog and include those (keywords) in the URL.
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Definitely - but try to make the name also personal or memorable in some way. You want your name to stand out.
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include keywords in the first sentence, about 10 to 15% inside content and last sentence.
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Use keywords for page in title tag, as part of description tag, in header 1 tag. Apart from that use them where it makes sense to do so. Don't count how often you use the keywords, pay attention to writing something that people will find interesting to read. You do want people to read your site, right?
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The point is to make the site content relevant for SEO purposes, quality relevant content would be second priority.
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If the purpose of your site is to get people on it then realise it's awful and click an ad to get away, then do it this way. You'll make it easier to get links and rank if you focus on the content first and the SEO second.
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how many quality backlinks would a site need to start getting ranked?
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Depends on how many quality backlinks your competitors have. You will not get quality backlinks unless your content is quality. That means you have to know your subject well and be interested in it, and you have to have something original to say.