Latent semantic indexing (LSI) is based on a patented mathematical formula that essentially identifies patterns and relationships in a collection of text (words).
The premise is that different words used in the same context tend to have the same meaning. For example, "blue mustang automobile" can also refer to "car" or "Ford". In effect, LSI keywords are synonyms for unstructured text.
The basics of search engine optimisation (SEO) ensure a web page is "optimised" for a given keyword. For example, the keyword for this webpage is "LSI Keywords".
When you follow standard SEO practices, this focus keyword for the page would appear in:
The challenge is to create enough keyword density within the content to adequately signal the search engines "this is the topic of this page". For example, if I wanted 3% keyword density in a 500 word article, this would demand 15 instances of the keyword within the content.
Imagine reading the same keyword or phrase multiple times in a short article.
This is where LSI keywords come into play.
As opposed to keyword stuffing a web page with the same phrase, a synonym or contextually similar phrase would be used instead. For example, the title above is an example of latent semantic indexing (LSI) keyword in action.
Technically, the search engines would recognize that I have am writing about LSI keywords even though I have not repeatedly used this phrase within the body of the article.
The nice thing about semantic indexing, is the freedom gained by the author with respect to the words being used.
Rather than being forced to repeat similar words and phrases unnecessarily (and artificially) there is an opportunity to apply some creativity without being penalized by the search engines for being "unfocused".
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