AdWords keywords: Few high competition vs lots of low competition?

Use both and test out how they work. Using the cost for a keyword is a poor way to measure its performance. There are a few things that can affect the cost per click of a keyword. Competitions bidding, your bid, your quality score and so on. Beside that, a keyword can be expensive simply because everyone is bidding on it. Doesn't mean it converts well. I consult small businesses on their digital marketing campaigns and see this all the time. They type in what keywords they think will get clicks and just bid on them. Most do not put in any effort, research or tracking, or simply just don't know how. The fact of the matter is you can find cheap keywords that convert. You just have to find them. Ad content and landing pages have a lot to do with conversions as well. If you just bid on the cheap keywords and send them to your homepage and can guarantee your conversions will be awful. What I tell most of my clients, is plan on your first 3 months of advertising as nothing but a learning experience. Do NOT count on conversions. Of coarse they get sales, but you really need to run some test and see how things perform and optimize from there. A good starting point. Ad groups should be semi specific to start. Each ad group between 10-20 keywords to start. Broad match so you can see what is actually getting clicks. As the ads run you can modify, use negative keywords to really dial in those ads. Also run a few different ads in each ad group and set them to show evenly. These will show you what works, phrase and ads YOUR customers like. Not necessarily which ones you like. Also link your Adwords and Analytics accounts. This will give you a complete picture of what is going on. Before the click, and then the interaction after the click. Best a luck!

I would agree with JPC11 you need to test them both out. There really isn't a rule about which keywords and their corresponding search volumes are better. Some keywords are more for information seeking (Upper Funnel) while others are ready to buy keywords (lower funnel).

But you don't want to only target the lower funnel keywords because then you will be missing out on a lot of potential customers in the information seeking stage. You want to keep the funnel oppen bringing in new people.

Keep ad groups specific and test, test and test again.

If you need any additional help or would like me to take a look at your campaign and give some recommendations I'd be happy to help.

If you want increase sales & traffic then you should always select small keywords like seo service company, but if you are new in market then also you can select long tail keywords because they gives you visibility in low bid that helpful in brand promotion.

You need to figure out where your conversion are coming from.

Some keywords are cheap but dont convert, some keywords are expensive for a reason, they do convert, what means customers that actually buy something are searching that exact phrase.

That's why keyword pricing is always relative to what kind results they bring in.

It's not cheap vs expensive per se, but rather what is the ROI on each of them.

It really depends on you goals.

Want cheap traffic, go with cheap keywords.
Want conversions, go with better converting keywords.

It really does not matter short or long-tail, exact or broad if it works for you.

My advice is that you need to test everything properly. Set up tracking system and let it roll.