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From MSN Webmaster Help
About your site description
As MSN Search web crawler MSNBot crawls your site, it analyzes content on indexed pages and generates keywords to associate with each page. Then MSNBot extracts page content that is highly relevant to keywords (often sentence segments that contain keywords or information in description meta tag) and constructs site description displayed in search results. The page title and URL are also extracted and displayed in search results.
From Yahoo Search Help
Yahoo! Search ranks results according to their relevance to a particular query by analyzing web page text, title and description accuracy as well as its source , associated links, and other unique document characteristics.
Comprehensive article by Jill Whalen From HighRankings.com
Read complete article at: http://www.highrankings.com/allabouttitles.htm
What Is a Title Tag? The title tag is one of most important factors in achieving high search engine rankings.
A title tag is essentially an HTML code snippet that creates words that appear in top bar of your Web browser.
The title tag belongs in section of your source code, and is generally followed by your Meta description and Meta keywords tags. The order of these tags is not critical, so don't worry if your HTML editor places them in a different position.
Some Web site design tools and content management systems (CMS) automatically generate title tag from information you provide. You may have noticed Web pages that are labeled "Page 1," "Page 2," or "Home Page" in browser title bar. You'll often see titles like these being used by beginning Web site designers who simply don't know how to use their software or their title tag for maximum benefit.
Dave is a full-time Search Engine Marketing Manager. He also runs SyteSurge, a web site dedicated to search engine optimization and search engine marketing.