I have been searching for some keywords to target under the following categories: Health, Loans, insurance, and taxes for the high payout. Now I have used DP's keyword suggestion and have found two words or phrases in each category which have about 3-4K hits per day under wordtracker and overture. Now with those keywords I entered them into technobloggie's google keyword tool and some phrases have half a billion sites and some phrases have 20million. At what point do you consider the volume of websites too competitive? My idea is to promote a blog with the keyword(s) through RSS Dirs, Blog dirs and article dirs(which I have a content writer currently working on. Obviously there is no magic number but I would love to know what the numbers are that people actually go ahead and take a shot at building the site. Search Results? Max Bid? Daily Search Volume? Monthly Search Volume? Are there any other ones you factor in when making your decision?
It is also important to see against who you will be competing. I have a site in a niche that the popular searches bring about 4-5 million results. This doesn't seems like huge competition BUT all the sites up to page 10 of google results are strong high PR sites with lots of backlinks. The competition is not just a numbers game but it is also about the quality and strenth of competitors
Agree 100% with dkessaris You need to do a lot more analysis of the top competition for a certain term. I am optimizing a site for a 3 word key phrase of which the top 20 sites is very well optimized and market. I think the more money is to be made in a certain area, the harder it becomes