Keywords in URLs - YES!
Jill Whalen recently sent out a newsletter talking about how useless keywords in URLs are and that SEOs who suggest this tactic are not to be worked with.
I have never agreed with Jill on this point. We have debated it for years. I totally agree that it is not worth doing if you have an indexed site with good rankings under the keywords you want. That is not usually the case. I also agree that there will be a 'down time' or loss of rankings during the switch over but with Google sitemaps and Yahoo's free submission that shouldn't be as much of a problem any more. I also agree that if the technical hurdles to making these changes are daunting and time-consuming it may not be worth it.
What I disagree with is that it doesn't help. I believe it is part of the search engine's algorithm. I believe it helps with rankings. And I believe it helps with the appealing nature of the actual, visible result so that a searcher may click more often. I also believe it needs to be done in moderation like anything.
So, I would never suggest somebody rewrite their URLs when it would take 2 weeks of an engineer's time or if everything is good already. But I would recommend it for new pages or during extensive redesigns.


