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On #2, original content written for people, not just for search engines wins every time. It's too easy to fall into the trap of tailoring your content just for the search engines while forgetting the fact that it is people who click links and buy.
The content you provide should hold some value to the surfer. When writing content ask youself "why should someone care ?", "why should I stay on this page and then click a link ?", asking those questions and writing original content with those questions in mind will turn more surfers into buyers.
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