Finding a Profitable Niche: 6 Essential Questions to Guide Your Research

profitable niche

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So you’ve selected an audience to serve, and brainstormed some problems faced by that audience. How do you zero in on the problems that have the greatest chance of making you a profit?

In this post I’m going to cover the key questions that I ask when researching a market. While answering these questions won’t guarantee that a niche will be a money-maker for you, filtering your ideas through them will GREATLY increase your chances of success.

So let’s jump in!

Is the Niche Large (Enough) and Stable?

Niche Size

Now, I’m not saying that “bigger is better” (correct me if I’m wrong, ladies). But when you’re just getting started in internet marketing, having some early successes is extremely important – because success breeds confidence and the will to push forward. By entering a market that is big (enough) and stable, you’ll be setting the foundation for a long-term online business.

So how many keyword searches make a niche “big enough”? That depends on one key factor: the amount of profit you make from a typical sale.

If you’re an affiliate for a product that pays a $197 commission, you’re going to need far fewer sales to make a full-time income than if you’re selling a $17 e-book (even if you’re advertising costs are much higher for the $197 product).

So the key factor you need to balance with the search volume of a niche is how much money you stand to make from an average sale.

Having said the above, if I was forced to come up with a number, I’d recommend you don’t go into a market where the top keyword gets fewer than 30,000 exact match searches per month.

When you look at the numbers that matter (e.g. % of people who will click on your organic listing or paid ad; % of site visitors who end up buying from your site), a niche that gets below 30,000 searches per month will be hard to make work, unless your average order size is large.

Niche Stability

“Niche stability” simply means that the top keywords in a niche get the same amount of search volume over a long period of time.

Here’s a concrete example. Say I’m interested in surfing in Hawaii (which I am, actually), and I’d like to start a site that specializes in surf trips to Hawaii.

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How would I make money from a site related to surfing trips to Hawaii? There are a bunch of potential revenue streams:

  • Lead generation for Hawaiian surf charter companies;
  • Cost-per-acquisition revenue from local hotels;
  • Equipment sales – like surfboards – through Amazon.com’s affiliate program;
  • Cost-per-click revenue through eBay and Adsense

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One of the first things I do when researching a niche is look at the niche’s top keywords in Google Trends. Google Trends shows you the pattern in search volume for a keyword over a number of years.

Here’s what I got for the term “surfing Hawaii”:

Click image to enlarge

Notice a couple of things here:

1.      The trend since 2004 has been a DOWNWARD one for this keyword. That means fewer people are searching for “surfing Hawaii” today than in 2004.

We could speculate as to why that is: being a surfer, I know that in the past 5 years there has been an explosion in new surf locations (such as the Maldives and the Mentawais) that were previously unknown. My suspicion is that Hawaii simply isn’t as popular a surf destination as it was before, because surfers have so much more choice these days.

2.      If you look just below the graph you’ll see “Regions”. That section lists the countries where most of the searches are coming from. In the case of the keyword “surfing Hawaii”, more people from New Zealand and Australia and typing in that keyword than people from the U.S.

From an advertising point of view, this is extremely useful information. If I did start a website on surfing in Hawaii, I would focus my pay-per-click dollars on those two countries. I would also focus my SEO efforts on getting backlinks from sites that are based in those countries (which would increase my site’s rankings on Google.com.au and Google.co.nz).

Is There Strong Desire in the Niche?

You’ve probably heard the internet marketing axiom “the money’s in the list”; a close second to that is “find a market that has desperate buyers”.

The benefits of serving a market that has a strong desire for solutions (or a passion for a topic) has obvious benefits. But how do you find such a niche? Here are a few things I look for:

Do people lay awake at night worrying about a problem? This question is particularly appropriate in health and money niches.

There are hundreds (if not thousands) of health problems that people face, and those problems are only going to become more widespread as the populations of developed countries age, and people in developing countries become increasingly overweight.

Are people actively searching for the solution to a problem? People may lay awake at night worrying about a problem, but if they’re not looking for solutions on the internet you won’t be able to reach them. (Unless you’re planning to lay down a few million for a Super Bowl ad 😉

Are there any Yahoo! Groups on the topic? Yahoo! Groups is one of the largest collections of “discussion boards” (i.e. forums) on the web, with around 10 million groups and 115 million users.

The existence of multiple Yahoo! Group in a niche you’re researching is a good indication that there’s passion for the topic – especially if those groups have a large and active membership.

Are People Already Making Money in the Niche?

Let me start off this one by saying this: if no one is currently making money in a niche, that does NOT mean it doesn’t have potential!

I know this from experience, because I operate in a couple of markets where I effectively have no competition (and in one of those markets, there aren’t more than one or two advertisers on Google for any of my target keywords).

Having said that, if you’re really conservative, the existence of people in the market might make you feel more comfortable, because you know that some money is already being made.

Here are some indicators that there’s money to be made in a market:

Is there a “Dummies” book on the topic? The publishers of the Dummies series of books are no dopes themselves. In fact, considering that they’ve grown their business to 200 million books in print in just 15 years, I’d say they’re pretty astute. The existence of a Dummies book is a good indicator that there’s money to be made in a market, because the publisher does thorough research into a market before deciding to launch a new book.

How many Amazon.com books are there on the topic? If there’s a ton of books on Amazon, chances are the topic is either really trendy or it’s an “evergreen” niche. You don’t want to build a business on a trend – what you’re looking for are the evergreen niches. Use the Google Trends tip mentioned above o figure out which category your niche fits into.

Are there products being advertised on Google? If there are lots of different products being advertised on Google in a particular niche, you know there’s a broad base of demand for products in that market. Example: in many health niches (such as diabetes) you’ll find advertisements for medical equipment, pills, information products, etc. That’s what I consider a niche with a broad base – and it’s a pie that you can carve your own slice from.

Will it be Easy to Get Traffic in the Niche?

Traffic is the lifeblood of any internet marketing business. While there are a handful of components of an online business, I think a successful one boils down to this simple equation:

Compelling Offer + Targeted Traffic = Lots of Profit

The availability of affordable, targeted traffic is also a key factor that you need to consider when researching a niche. Here are a couple of questions to ask yourself related to traffic:

How hard will it be to rank for my core keywords? If you plan to promote products through your own website, you’ll want to get free traffic from the search engines as quickly as possible.

How to rank highly in the search engines could be (and is) the subject of an entire course, but here’s a quick rule of thumb: if you’re new to IM, you probably don’t want to go after keywords that have more than 50,000 exact match web pages in Google.

For a good, free tutorial on SEO, check out SEOMoz’s Beginner’s Guide to Search Engine Optimization

How much will it cost me to buy paid advertising? I know a lot of people are enamoured by SEO and getting free traffic, but pay-per-click (PPC) advertising has always been my favourite way to promote products.

PPC is a VERY quick way to get traffic, and if you follow sound niche research techniques, you’ll create (or pick) a product that will convert highly – which means you’ll be able to afford to pay for traffic.

Check out this good introduction to PPC advertising.

Are there sites that you can partner with? This is one of the most overlooked sources of traffic for newbies (and, not coincidentally, one of the top traffic sources for the most successful IMers).

“Partner” sites can take the form of affiliates or JV partners. I have affiliates who promote my Clickbank products, and they’re a great source of traffic that doesn’t cost me a penny.

How Much Competition is in the Niche?

Competition is obviously a hugely important factor in researching a niche, especially if you’re a newbie to internet marketing.

As I said previously, you want to build confidence early in the game – and confidence usually doesn’t come from getting annihilated in your first market.

Here are a couple of questions you can use to explore the amount of competition in a niche:

How many advertisers are on Google? Once you’ve done a bit of keyword research for your niche, pick a handle of keywords that imply intent to solve a problem and type the keywords into Google.com.

What types of products are being advertised? How many advertisers are there for each product category? Answering these questions will give you an idea of the amount of money there is to be made in a market, and how stiff your competition might be.

What is the quality of free information on Google.com? If you’re planning to develop your own product, the quality of free information MIGHT be a factor in the amount of sales you make.

I say MIGHT, because many information marketers (myself included) operate in markets where there is plenty of good, free content. So why are those marketers still able to make sales? Because most people hate spending hours online searching for information, and are willing to pay to have all of the information they need delivered to them in a tidy package.

Is There a Unique Position I Can Take in the Niche?

Sometimes it’s good to be a small fish in a big pond. With “macro niches” (like weight loss, personal development, and other huge markets), it’s often possible to carve out a new and unique position. And because the niche is so huge, even a small slice can provide you with a full-time income.

Here are some questions to ask yourself when looking at macro niches:

– Is it possible to license an existing product and turn it into a different format (for example, turn text content into an audio or video series, or a membership website)?

– Is there a way I can “mash” two niches together, to form a completely new niche? Good (and weird) example: yoga for dogs.

– Can I solve a common problem in a way that is currently not being used in the market? Can I use the following angles to solve a problem: “insider secrets”; solutions from experts; stories of personal triumph.

Summing Up

There are literally thousands of untapped niches on the internet. Some of these are “micro” niches that have never been served by marketers. Others are “macro” niches (like weight loss and personal development) that will continue on for eternity, because there will never be a one-size-fits-all solution for every consumer.

Your challenge is this: to find a micro-niche, or small slice of a macro-niche, that you can dominate. Use the techniques I’ve outlined in this post to get started in finding one!

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If this post turned your crank, you will be COMPLETELY aroused by the Niche Sherpa Video Coaching Course, which I will be launching on February 1st (but I’ll only be keeping it open for 72 hours. Then I will snobbishly close the program, like Frank Kern does).

The Niche Sherpa Video Coaching Course will include:

  • Training videos
  • Homework assignments
  • Step-by-Step PDFs
  • A members’ community (formerly known as a “forum”)
  • Some other stuff that I’m keeping as a surprise

Basically, the course will be an A to Z guide to finding a profitable niche, developing a product, figuring out the type of website to put up, and starting to get traffic.

If you’d like to be notified as soon as the Niche Sherpa Video Coaching Course is available, please make sure you’re on my email list (if you received an email about this blog post, you’re already on it).

About the Author Moe Muise

I've been making money online since 2009 and have a passion for research. My focus is niche research: finding profitable niches, keyword research, and competition analysis, as well as creating outstanding content.

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