The basis of a succesful website promotion campaign is chosing the right keywords. To determine your most suitable keywords, several factors should influence your decisions.

How many times do people search for this keyword ?

It's important to know wheter people tend to use the singular or plural version of your product or subject. For example, do people look more often for 'url submission' or for 'url submissions' ?

Several online tools exist to get a feeling for the terms used to find products and information about your subject, the most well known is Google's AdWords Keyword Suggestions tool. Probably the best free choice at the moment.

If you are a professional webmaster we recommend KeywordDiscovery.com
The service is not free but they do offer excellent Keyword Research data to discover the best keywords to target on your website. Next to that they offer a few interesting products such as their Competitive Intelligence product to find out which sites send the most traffic to your competitors, and Search Intelligence to find out what keywords are actually bringing your competitors the most traffic.

Wordtracker
Offers a free, 'lite' version, and a paid version. Features include an online management system for different keyword projects, searching for often misspelled words, a system to calculate your best keywords, and much more. 

How much competition do you face for this keyword ?

For the word 'competition' you could also read costs, energy, effort, time. Generally speaking, the more popular a searchterm, the more competition from other webmasters. To stay with the website promotion topic, let's say we want to promote a site offering search engine submission software. At the moment of writing, Google found the following numers of results, behind that are the number of times that searchterm occurs in the WordTracker database.

9.160 results for 'url submissions', searched 24x
54.500 results for 'url submission' , searched 189x
31.200 results for 'search engine submissions', searched 2261x
181.000 results for 'search engine submission' , searched 1315x

This tells us search engine submissions is a much better target then search engine submission. Even if they would both be searched the same number of times, the competition for the plural version is 5x less. (only 31.200 pages competing versus 181.000 pages)
Almost every subject has it's niches like this, and these are generally the most interesting to target.
It would probably be a waste of time to focus on url submission, actually the first word I thought of for this example.

Remember you are working with samples only when researching your keywords this way.. For example, Overture is a commercial search engine, so it's visitors may be more shopping minded then those of other engines, and that may influence the results of their online keyword tool. I'm not sure if searches at the partners of Overture are taken into account for this tool.
To get a feeling for the number of competitors any search engine with a large database should do, but beware of stopwords, poisonwords and adultwords as they may cause exceptional result numbers.

If you want to assess the competition for a phrase (as in our example), it's better to search for the exact phrase. In most engines that means using quotes, as in "search engine submissions". Sites that use the same words but in different order can hardly be considered serious competition.

Also have a look at the 'strenght' of the competition. Are the other sites that are found for your keywords trully competitors ? Are they selling the same product, are these their most important keywords, are the others sites conciously optimising their pages ? Are the other sites even in the same language as yours ? Does your keyword have a (totally) different meaning in other languages ?

Conversion ratio. How many people finding your site with this keyword will buy something / be happy ?

For our site selling submission software, the best potential customer may be one looking for search engine submission software.
10.100 results at Google, counted 141x at WordTracker. Though not as attractive in numbers as search engine submissions, the probable conversion ratio makes this an interesting target as well.
Estimating conversion ratio's is a matter of common sense and experience with the behaviour of visitors to the site. If many people coming in through searchterm url submission leave the site without buying anything it may be because they are actually looking for general information about website promotion, a free online submission tool, or just a place to submit their url.

When you have determined the best keywords for your project and included them into the text on your pages it's time to check on their placement and density