Anilrgowda

The wise choice of the right keywords you will optimize for is the first and crucial step to a successful SEO campaign. If you fail on this very first step, the road ahead is very bumpy and most likely you will only waste your (or your client's) money and time. There are many ways to determine which keywords to optimize for and usually the final list of them is made after a careful analysis of what the online population is searching for, which keywords have your competitors chosen and above all - which are the keywords that you feel describe your site best. All of this is great and certainly this is the way to go but if you want to increase your chances of success, additional research is never too much, especially when its results will save you the shots in the dark.
Dreaming High - Shooting the Top-Notch Keywords?

After you have made a long and detailed list of all the lucrative keywords that are searched by tens of thousands a day, do not hurry yet. It is great that you have chosen popular keywords but it would be even greater if you have chosen keywords for which top positioning is achievable with reasonable effort. If you have many competitors for the keywords you have chosen, chances are, no matter how hard you try, that you will hardly be able to overtake them and place your site amongst the top ten results. And as every SEO knows, if you can't be on the first page (or on the second and in the worst case on the third one) of the organic search results, you'd better think again if the potential gain from optimization for those particular words is worth the effort. It is true that sometimes even sites that are after the first 50 results get decent traffic from search engines but it is certain that you can't count on that. And even if you somehow manage to get to the top, do you have any idea what it will take to keep the good results?
You can feel discouraged that all lucrative keywords are already occupied but it is too early to give up. Low-volume search keywords can be as lucrative as the high-volume ones and their main advantage is that you will have less competition. As a result of this, it is possible with less effort and within budget to achieve much better results than if you targeted the high-volume search ones. In order to do this, you need to make an estimate about how difficult it would be to rank well for a particular keyword.
Get Down to Earth

The best way to estimate how difficult it would be to rank well for a particular keyword is by using the appropriate tools. If you search the Web, you will see several keyword difficulty tools. Choose a couple of them, for instance Seochat's Keyword Difficulty Tool, Cached's Keyword Difficulty Tool and Seomoz's Keyword Difficulty Tool and off we go. The idea behind choosing multiple tools is not that you have so much free time that you need to find a way to waste it. If you choose only one tool, you will finish your research faster but having in mind the different results that each tool gives, you'd better double check before you start the optimization itself. The Seomoz's tool is a kind of complicated and if you want to use it you need to make several registrations but it is worth the trouble (and the patience - while you wait for the results to be calculated).
You may also want to check for several keywords or keyword phrases. You will be surprised to see how different the estimated difficulty for similar keywords is! For instance, if you are optimizing a financial site, which deals mainly with credits and loans, and some of your keywords are finance, money, credit, loan, and mortgage, running a check with the seochat's Keyword Difficulty Tool produces results like these (the percentages are rounded but you get the idea): finance - 89%, money - 76% credit - 74% loan - 66% mortgage - 65%.
It seems that the keyword finance is very tough and since your site is targeted at credits and loans and not on stock exchange or insurance, which are also branches of finance, there is no need to cry over the fact that it is very difficult to compete for the finance keyword.
The results were similar with the second tool, though it does not give percentages but uses a scale starting from Very Easy to Very Difficult. I did not check all the results with the third tool, because it seems that the seomoz report on keyword difficulty for a particular word needs ages to be compiled but the results were similar, so it becomes clear that it is more feasible to optimize for mortgage and loan, rather than for the broader term finance.
You may want to bookmark some of these tools for future use as well. They will be very useful to monitor possible changes on the keyword difficulty landscape. After you have optimized your site for the keywords you have selected, occasionally check again the difficulty of the keywords you are already optimizing for because the percentages are changing over time and if you discover that the competition for your keywords has increased, make some more efforts to retain the gained positions.

Gracia

Does anyone have any experience using the SEO MOZ KW difficulty tool? I've used the tool a lot and have seen the difficulty % change dramatically from day to day for the same keywords. (Obviously I know that nothing like this is 100% and is supposed to be used as a guide only).

When you are looking at keywords for a site, if you use the tool, where do you personally draw the line? In other words, what difficulty % do you consider not worth your time?

In my experience, a keyword with the score of 45% takes about 9 months to rank well. So, anything with a 50% or higher, I don't even bother with.

Perhaps someone else uses the tool differently. I'd love to hear your thoughts.

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