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Does capitalization matter for SEO?
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Two places capitalization comes into play:
(1) on-page use (title, h1, body text, img alt text, etc)
(2) external anchor text
I didn't think it mattered from Google's point of view for on-page usage (is this correct?) but I notice that OpenSiteExplorer' s 'anchor text distribution' tab shows different counts for the same keyword if it's capitalized in different ways (eg seomoz.org is listed separate from SEOmoz.org). Is that just OSE or does Google treat the keyword/phrase different based on its capitalization, too?
And if so, then should I be creating external links to my site with the 'regular' and 'Capitalized' versions of my key phrases?
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It still takes place, and can be up to a page apart in ranking a site for one keyword and capitalized and lowercase as well lowercase results were 1,450,000 and uppercase were 2,430,000 that's kinda offputting since for many keywords, it's going to be a matter of preference of a user on how they will either uppercase or lowercase a search term.
It's sad 3+ years later it's still the norm.
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I already encountered this since 2004, having keywords with capitalization and non capitalization has different results in Google.
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So, to summarize, it doesn't matter for SEO

However, it can matter for URL's, CRO, CTR, backlink juice and a few other possible issues that are more language use related.
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it doesn't matter don't worry

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Agreed - I've seen it cause duplicate content issues with URLs, but I'm not aware of situations where it mattered in on-page keywords. I don't like lower-case page TITLEs, because they look spammy, but that's more a CRO factor.
One minor exception, but I'm not sure it's in play anymore. I once ran into something where acronyms were pulling up different results depending on what case they were in. Google might have been mistaking the acronym in question for a misspelled word, though - it's a really isolated case.
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I agree that capitalization doesn't matter in SEO, and that it can only influence you negatively if you make mixed case URLs as they are harder to link to.
That being said, I have sometimes observed that SERPS are different on lowercase and higher case queries.
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Hi Mike:
Keyword capitlization makes a difference is in the URL's. (Personally I recommend sticking to lowercase.)
As far as elsewhere on page as far as I can tell, the search engines don't differentiate.
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