The practice of "gathering keywords" can become a bit of a distraction too. It is important to find the higest quality keywords and develope content around those but don't get to the point where you are going in too many directions at once.

Two or three good key phrases that match high quality search terms related to the business is much better than trying to optimize for dozens of different keywords or phrases. An exception is where you have a shopping site with hundreds or thousands of products. With that, you will want to optimize each product page.

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