When I started my first blog I had far too many categories, often with matching tags. I would place articles into more than one category. What a mess. I was having a hard time finding my own articles! I'm sure Google was having the same problem.
Getting this right from the start will save you time in not having to go back through possibly hundreds of articles to file away correctly after you have already built your website.
Categories
The first rule of thumb is to place each post into only one category. Think of categories as dresser drawers. You wouldn't try to put one sock into two different drawers. Articles are the same as socks, and categories are the drawer we place them in.
You can however place a post into a sub-category that you can create from within the post dashboard. This is the only time I check two categories on a post. As long as it's a sub of a main category, all is well.
This will make it easier for people to find your articles, and Google won't be seeing cross-eyed when it crawls your blog. Google could consider multiple categories on an article as double content, a big no in Google's webmasters' guidelines.
All my sites are category based, rather than tag based. On my affiliate marketing sites, I set up my main categories with the brand name, such as Crossman, and then set the subcategories to the specific model that is on the post. This has been working quite well as far as showing up for specific key-word phrases.
In general, I try to have only a few main categories, each covering a broad general topic. I try to keep under ten categories.
Post Tags
You can then use multiple tags to further organize the article. I generally use three to five tags, and think of them more as key-words. Think of your tags as areas within the dresser drawer. A quick example:
Let's say we have a cooking blog. We could have a category titled sauces. If we write an article on spaghetti sauce, we would place it in the sauces category and then use tags like Italian sauces, meet ball sauce, red sauce, and tomato sauce and so on.
If we had a music blog, we could have categories like Rock, Jazz, Country, and Classical. Within these we could have tags like Miles Davis, Beethoven, and the Smashing Pumpkins.
In summary, try to think of broad general terms that would describe the product or service. Then use subcategories with more targeted and more specific terms or phrases. You can then add more categories and subcategories as your blog develops.
These categories should include some of your key words for your blog. This will help tweak your blog for SEO.
Next, think of three to five tags that would describe the product or service you are attempting to market. This will give you a good foundation to build your blog on. I like to, think of my blogs as pieces of cyber real estate. Every good home needs a sound foundation.
Building a category based website and using tags as keywords is a fantastic way to keep things organized, not only for SEO and Google rankings, but for your site visitors as well.
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