The Long Tail Search
You know personally I go for competitive terms such as web design, website design, internet marketing, and I go for long tails but the reason I got for such competitive terms for is because I run a SEO company, so its excellent for branding if you get my drift. Now they say the long tail converts better which in one sense this is true, but then again depends. When your targeting terms you want the terms to evolve around your website.
For example if your in the web design business, but you only serve smaller business then you would use terms such as small business web design, busines web design, or just anything you could mime up to fit that category. Now with broad terms such as website design you will attract a wide audience of people such as small business, corporate, smaller companies, larger companies, and etc. The best way to target your terms is to just test, test, and test and see whats running smoothly.
Generally when a client calls me I try to get target keywords that are at least getting 25-100 clicks per day through adwrods. Reason being is because some keywords out there just never get no traffic, but then again a mixture of everything works great. I just like to know that there getting results with certain keywords, just my way of doing things and it sure does work. I could target 30 keywords for a client thats estimating at 1500 clicks per day through the traffic estimator on Google and they get some great traffic from it plus other queries around that.
Test, Test, Test and once again test and see what works best. If you have any questions please feel free to comment below.