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How SEO Works

This is an extremely brief introduction to SEO. It aims to inform you what SEO is, but not to teach you how to become an SEO expert. Much of the SEO process is just hard work and learning from your errors.

If you do your own SEO you will still likely want to chat in SEO forums and read books on the topic before starting. Many of the print books can go quickly out of date, but if you ask around there will likely be at least a couple good guides which are commonly recommended.
What is SEO?

SEO is the art or science of gaining top search engine placement for relevant keyword phrases through making search engines believe your site is more relevant than your competition’s websites.
What are Keywords?

Keywords are terms or (more often) phrases you would expect someone to search for to find your website. With SEO you pick your keywords and create pages focused on them. You can only focus each page on a specific keyword phrase or few specific keywords. One of the best tricks to SEO is to gain traffic using many pages focused on specific terms vice focusing on broad single word terms. Specific terms are usually easier to rank well for and often have a higher conversion rate (since a longer query is often associated with greater searcher intent).
Using the Correct Domain Name

Acquiring links is important to rank well for competitive terms. When possible you want the links pointing at you to use your keywords in them. Other sites (especially directories) are more inclined to link to you with your keywords in the link text if they are also in your official site name or domain name. It is usually a good idea to use your keywords in your domain name when possible.
SEO Feedback Time Frame

When you search a search engine you are not searching the web. You are searching their cache of the web. It takes search engines some finite amount of time to find and properly index new links and pages.

If you are new to SEO (or are just beginning to do SEO on your website) it may take up to six months or more to gain a top ranking for a competitive phrase. If you work hard enough you can usually rank well for less competitive phrases in as little as a couple months.
Gaining Top Rankings can take a Long Time

Some of your biggest competitors have likely been around for a long time and have many links built up over time. You can view their links by:

Searching Yahoo! for linkdomain:www.CompetingWebsite.com ;
Searching Google for link:www.CompetingWebsite.com ;
Yahoo! usually shows more links to your site tha
Google does, and each search engine will likely show some links the other is not showing;
Search engines know of and evaluate many more links than they show using a backlink check. Even though all links do not display, checking backlink can help you estimate the popularity of a site.

How to Build Links

Register your site in major directories such as the Yahoo! Directory and DMOZ. I also register my clients websites in many of the smaller directories and niche specific directories. Search engines often do not count links that go through redirects, so before spending money on a listing you will want to check if the directories provide static links. Business.com and the Yahoo! Directory are two directories which provide static links and show tracking URLs in the status bar when you hover over the links. Most other directories that show tracking URLs do not provide links that are evaluated by search engines.
Write press releases and articles and syndicate them on other sites. Link back to your site (using your keywords when possible) in the article signature block.
Ask friends, product manufacturers, product distributors, and other business partners to link to your site.
Sponsor sites and get them to link to you.
Buy advertising from related websites.

How Much Should SEO Cost?

Quality SEO is time-consuming and usually requires an investment of at least 4 figures if you are paying someone else to do your SEO for you. You may be able to find a cheaper SEO service if you are in a niche field and have your keywords in the domain name. I would suggest setting aside at least a thousand or few thousand dollars for SEO if you are hiring an SEO.

Some SEO steps are time-consuming and expensive. Long-term link building requires significant expense in both time and money. The cost of effective SEO can sometimes be as low as $500 to $1,000 and it can cost $10,000 a moth depending on how niche or competitive your field is.

The price of SEO is typically market driven. Niche fields do not cost much, but if you are in a business that can make thousands of dollars per day then you should expect to be paying thousands of dollars per month.

It may be worth it to hire someone in-house to do SEO. If you do your own SEO services make sure you account for the time you spend when figuring out how much it is costing you.