I’ve read that “Beginners Guide” before, among many other articles and discussion points, and either I haven’t had it explained to me clearly or the point being made actually refers to some magical density algorithm that doesn’t really exist, which I kinda agree with, but Google does take keyword density into account. Google refers to it as Keyword Significance.

If you check your Webmaster logs you’ll see that Google measures the frequency of keywords in the site’s content so they ARE measuring keyword density for sure. Google goes on to explain it, as follows;

“The Keywords page lists the most significant keywords Google found when crawling your site. When reviewed along with the Search queries report and your site’s listing in actual search results for your targeted keywords, it provides insight into how Google is interpreting the content of your site. The significance of each keyword reflects how often it’s found on your site’s pages. Click each keyword to see a sampling of pages on which it appears.”

Granted, Google doesn’t explicitly suggest that the more significant a word is, the better it will rank for it, but I can say that from personal experience that if you run a tight ship and your primary keywords show up in that list in the order in which you intend (most to least significant) then the better SEO’d the site is, not just for Search but for Adsense. I’ve manipulated that list for a few sites, at the granular level, changing the words I use or the way in which they are presented so that I’m left with a clean list of intended words, and it does have an effect on SERPs.

So, Google throws out the common words, and sifts through the rest to determine what your site is all about, and then Google presents it to you in a report. I think it is just irresponsible to acknowledge their crawl interpretation of your site but then assign no value or weight to it.