There have been many discussions about what part of site optimization has the greatest effect on rankings. In the forums at SEO.com and other various forums, I have seen multiple threads about what elements have the most weight in the algorithm. Many people say that the title tag has the most weight, and I do agree that the title tag has the most weight out of the various elements of a web page. You can read over Nathan’s blog post about optimizing title tags to get some ideas on getting the most out of that element. However, even before the title tag there is something that I would include in site optimization that has a big impact on search engine rankings: the domain name.
To optimize a domain name it is important to have already done the keyword research and have an idea of a good search term to target in your niche. With the keyword research done, the next step is to search for a domain name that has the chosen search term in it. The most valuable domain will be one with only those search terms in the name. For example, if I have a site about breeding angelfish, I would look for "breedingangelfish.com." If that is taken, I look at others like .net or .info (if it is an informational site). If those are all taken, the next option is to add a hyphen between the targeted search terms. This strategy works well and gives a website a considerable advantage in site rankings for the targeted search term.
When looking for keyword targeted domains, don't go too long. Long keyword stuffed domains have a good chance of being flagged as a spam site in the search engines--especially if you hyphenate each word. Don’t get too many keywords in the domain name, and don’t go overboard with hyphens between words. Going back to my example of breeding angelfish, it would not be a good idea for me to get a domain like "breeding-tropical-fresh-water-angel-fish.com." That cries out saying “flag me as spam”.
It can sometimes be difficult to register a good domain since many of the best keyword optimized domains are already owned by domainers. If you get lucky and find a keyword-targeted domain that is unregistered, snatch it up and use it--you'll be glad you did. If the perfect domain name for the site is registered by someone else, but not in use, make an offer on the name to see if you can buy it. If you can't get your hands on a good keyword domain, you better go get started on your SEO.