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7 Questions for Finding a Profitable Niche Market

by Steve Scott | Join Him On Facebook

Find a Profitable NicheOne question I’m often asked is:

“How do I know if I’ve found a profitable niche market?”

This is an important question – Especially if you’re about to build a large scale authority affiliate site.

There are a lot of tricks to determining if a niche is profitable.  The best way to get started is to answer seven simple questions…

#1 – Does it Have Competition?

I think competition is a good thing.  You want to find people who already have success in a niche market.  All competition really means is that people are already making money.  This is a good thing!

Don’t be afraid to go into a crowded marketplace.  There are so many ways to stand out and make YOUR content unique.  Even if a market has lots of competitors you can still generate traffic (and subscribers) by:

  • Building a large social media presence
  • Networking with your competitors
  • Sharing in-depth content that’s unique to your experiences
  • Recording high-value videos and building a YouTube presence
  • Guest posting on related sites

Never let the presence of competition prevent you from going after a profitable niche.  Instead, adopt the philosophy that competition means there is money to be made.

#2 – What is Google Adword’s CPC?

Another way to examine the profitability of a niche is to take a look at the average cost-per-click (CPC) that’s listed on Google Adwords. {You’ll need to open a free account to get these figures.}

CPC is the approximate price that marketers spend to advertise on Google Adwords.  This is an important figure because advertisers won’t spend money unless they’re profiting from a certain topic.

My suggestion is go after niches that get at least a $1 CPC.  As an example, I did a quick analysis of seven different markets that are proven money-makers:

Google Adwords Approximate CPCNotice how each niche topic is equal to or greater than the $1 CPC threshold?  One even goes as high as $75.  These numbers show that each market can be profitable.

#3 – What are the Existing Affiliate Products?

You need products to promote as an affiliate marketer.  Sounds simple, right?  Unfortunately I see many new marketers make the mistake of not researching existing offers before jumping into a niche.

The best place to start is to check out different affiliate networks.  These sites contain a large variety of products you can promote.  It’s important to start with an affiliate network because they provide an excellent overview of a specific niche.

Here are a few affiliate networks I recommend:

There are literally hundreds of affiliate networks.  But these seven are the best for determining the profitability of a niche market.

Another strategy is to check out what the competition is currently promoting.  Go to existing blogs/content sites to see what they’re doing to make money.  Looking at established websites gives you a great way to determine what’s actually working in this marketplace.

#4 – What are the Commission Rates?

The money you make in a niche is largely determined by existing products.  Odds are you’ll want to promote a few affiliate offers.  So you have to examine the commission rates for what’s available in this niche.

Put simply: You make more money with higher priced products and commission rates. 

Imagine this scenario.  You’re starting out as an affiliate marketer and want to average $100 a day.  You look at an affiliate network and see two promising offers:

    • Product A is priced at $29.97 and has a 50% commission rate.  So you get $15 from each affiliate sale.
    • Product B is priced at $59.97 and has a 75% commission rate.  So you get $45 from each affiliate sale.

Compare both offers and you’ll see that Product B has three-times the profit-potential of Product A.  With Product A you’ll need to sell seven copies a day to reach a $100.  But with Product B all you’ll need to do is successfully generate 2+ sales a day.

What’s my point?

It’s important to check out the commission rates of the products you promote.  Frankly, it’s not worth your time to market offers that only pay a dollar or two per sale.

Bottom line – A niche is not profitable if it only has low-ticket affiliate offers.

#5 – Are People Buying Information?  

You should choose an affiliate market that has people who buy information.  This is where the real money is made.  Sure you might want to sell the occasional gadget.  But the majority of your prospects should be interested in informational “how-to” products.

Get started by looking at the affiliate networks I listed in question #3 – Especially Clickbank & E-Junkie.

Another place to look is Amazon.com.  Just search for your top keywords to see if there are existing books on this topic.  Obviously a large number means people buy books on this subject and are willing to buy information products.  The buying information part is especially critical because this will be the cornerstone of your authority affiliate marketing business.

Example: In a recent post, I described what I would do if I had to start over as an affiliate marketer.  The niche is I would choose is “how to travel on a budget for the middle-class.”    When I hop over to Amazon and do a search for the ‘budget travel’ keyword, I get this result:

Using Amazon.com to Research an Affiliate Marketing NicheI see there is a Budget Travel magazine.  Plus, there over 4,000 paperbacks on this subject.  And interestingly enough, there are 369 Kindle Books.  Sure some won’t apply to my niche topic.  But these results show that people are buying information.  This clearly shows there is profitability to this niche market.

#6 – What are the Sub-Markets?

Niche profitability is also determined by the amount of sub-markets.

You don’t want to be in a market that has a single solution.  This limits the amount of money you can make.  With a single solution market, a person has no reason to listen to you after they make a purchase.

Instead you want to choose affiliate niches that have a wide range of topics and problems. (Tweet this!)

Each represents an affiliate offer you could promote.  For instance, let’s go back to the budget travel example.  You could easily promote a wide range of offers:

  • The best credit cards for accumulating air miles
  • Other credit cards that offer lots of bonus miles for new members
  • Last minute travel deals
  • Information products about saving money while traveling
  • Region specific travel guides
  • “Language Hacking” programs
  • Discount codes on hotels, flights, and rental cars

People seek information on each of these sub-markets.  This means there is an existing problem that can solved through your content and affiliate offers.

#7 – Is There a Passionate Audience?

Finally, you want to determine if a niche has a core audience.  I consider a market to be profitable if it has a group of people who have passion and regularly talk about this particular subject.

You want a market filled with people who have lots of pain and/or desire.  Here are a few ways to determine passion:

  • They talk about their topic
  • They join local groups that can be found on MeetUp.com
  • They have problems that occur on a regular basis 
  • They join forums
  • They read blogs
  • They have a magazine

These are all important factors for determining the profit-potential of a niche.  The folks in this market represent your potential customers.  So it’s important to know what they’re thinking.

Take Action…TODAY

Here is my final piece of advice for finding a profitable niche…

Take action!

I often talk to affiliate marketers who waste months by agonizing over niche research.  Yes, it’s important to be selective about a market.  But do this too long and you’ll get trapped by paralysis by analysis.

My suggestion is to do a little research and simply go for it!  You’re going to make mistakes along the way.  Just don’t let the fear of making mistakes prevent you from starting an affiliate business.

Now it’s your turn:

Do have any “niche profitability” strategies you’d like to add?  Are you still confused about how to get started?  Did I miss anything?

Comment below…

Take Action. Get Results.




P.S. Struggling with your Kindle books? Don't know how to get started on Amazon? Looking to generate an additional stream of income?

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{ 32 comments… read them below or add one }

Marius

These are great tips, Steve.
But I think if you are working with passion you can earn lots of money in any niche. You should try to recruit people and to get their interest in what you are doing. I couldn’t work let’s say in food niche, if I’m not interested at all. :)

Reply

Steve Scott

Absolutely,

While I don’t agree with the degree that some people place on passion…you don’t need to be fanatical about a topic imo, it is important that it is something that you like. To build a niche the “right” way, you will be spending a lot of time writing these topics, if they are something you do not like, it will make this a painful job after time.

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Ankesh Kothari

Excellent list of questions Steve.

My point of view is that there are 3 kinds of niches.

1. Evergreen niches. Your list of questions is awesome to find these evergreen niches. I like to ask the question: is there a magazine on this topic? If a magazine is being published on the topic, it means there are people who are paying money on a recurring basis for the content. And there are advertisers promoting their products.

2. New category niches. Find a topic that you know is growing insanely quickly. And be the first to position yourself as an authority for that niche. Example: A blog or a website on Pinterest right now would be awesome. Or on crowd funding strategies. There are no products about these 2 topics today. But you can bet that both of these will be huge niches within the next 1 year.

3. Seasonal niches. Things like Black Friday or Halloween. Often times you can’t look at the Adwords data or find if people are passionate about the niche. Because people will be passionate about it only 1 week in the entire year. But in that one week, you can earn for the entire year – if your seasonal websites rank well – and you do well with media purchases.

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Steve Scott

Ankesh,

Some excellent additional breakdown of the general niche sites. I agree with your analysis 100%.

I would also say you ca break each of the three down into 3 more categories based on “depth” of content.

Micro Niche sites (1-8 pages)
Niche sites (9-50 pages)
Authority sites (51+)
the page counts are a bit arbitrary..more of a “ballpark” thing

There is a lot of intermixing of these too. For instance you could have a niche site and capitalize on “new category” or “seasonal” topics for a few posts.

It really does get a little confusing when you think of what someone could be thinking of with the word “niche”. There are quite a few options there, and sometimes what is right for one type is wrong for another.

However, I like to think these 7 questions are good for them all.

Thanks for a great comment and additional info for people!

Stebe

Reply

Jens P. Berget

Hi Steve,

Awesome tips. What we are looking is a fairly competitive market, but with just enough competition for us to be dominant, or at least sell enough products? When I’ve been looking at the various stats to find a profitable niche, I’ve been thinking that if there is very low competition, there’s a reason :)

Reply

Steve Scott

Jens,

Yup, you nailed it. Sometimes I like to think of it like “Goldilocks and the Three Bears” You want it to be right in the middle.

These days really low competition probably means it won’t sell (bad). Or it is a brand new concept (really good). But trying to rank for “Mesothelioma” will probably be a fruitless endeavor. (Though, longtails could be possible).

If you try for competitive niches you can always work harder to rank, but if there isn’t traffic or a buying mentality in the niche you cannot create that even if you rank #1 in everything.

Reply

Sean King

hey steve,
i only discovered your site a couple weeks ago, but you’ve thoroughly impressed me with your posts. you’ve got a fan out of me :)

i would suggest searching for micro-micro niches in a popular niche! by being extremely specific and targeting an exact group, i’ve been able to find success in the dating niche.

for example:

niche: dating
micro niche: christian dating
micro micro niche: california christian dating
micro micro micro niche: san diego, california christian dating
etc.

anyways, just wanted to drop by and say hey!

Reply

Steve Scott

Sean,

I agree. Going micro-micro with your niches (specifically in more competitive areas) is the perfect solutions. I would still say you want to make sure the micro micro niches hav their own viability…but a good rule of thumb in any niche is to go deep…then try to go a little deeper.

Thanks for dropping by and saying hey!

Have a great week!

Steve

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Alan

Can you let me see your dating blog? Can I ask you which product you are promoting in your dating blog? What product do you choose for your micro micro niche: san diego, california christian dating?

Actually, I have had a bad experience with dating niche.

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JamesW

Great post and interesting questions, which one is your personal favorite if you maybe can tell us, thank you.

Reply

Steve Scott

James,

These are not really an either/ or list.

For instance, I love movies, creating a site about some old movie I love could be possible. It could rank and have competition (#1). Chances are there is a (#7) passionate audience. But no #5. (people buying information) Sure the potential for T-shirts, toys, trinkets etc. could be there…but that might be digging deeper into the niche and getting into less firm area.

In other words, it is better to find a niche that is at least “OK” in all aspects than one that if “great” in 2-3 and horrible in the rest.

Thanks,

Steve

Reply

JamesW

Honest reply, thank you I appreciate it.

Reply

Lesleyanneyp

this is definitely a great post, it is easy to be enticed to focus on a specific niche without really recognizing whether it is a profitable niche or not. these questions will help people filter and decide which niche would turn out to be profitable.

Reply

Dee@ Small Houses

Hello Steve.. Just signed up for your newsletter and lovin it!

“Do have any “niche profitability” strategies you’d like to add? Are you still confused about how to get started?”

I started a ‘passion’ site a few months ago SmallHouseLife.com and it’s growing gangbusters and has an off-the-charts open/click-thru open rate with it’s Sunday morning magazine.

After being on your list for a few days, I realize I MUST, must drill down to what the heck I’m going to focus on.. I mean is it about small house design? Lifestyle? How to downsize? I’m all over the board.

Now that I have terrific (and steadily improving) traffic, it’s past time to figure out how best to monetize.

I want, like you said, to have a main product with 5-7 support products. You might be surprised but I really can’t find that in all the affiliate sources. Soooooo.. I’m thinking that I should create ebooks to solve my readers problems.. I have one topic: “Ready to Downsize? How to Sell Your House even in a Down Market” Any suggestions on other topics? ..or products?

thanks, dee :)

Reply

Steve Scott

Dee,

I have to say I know absolutely nothing about houses, being a guy who has always lived in apartments since I left home for college 20 years ago, so I have no concrete “ideas” on what would work for topics or products.

…but that being said, it sounds like you are on the right path narrowing your focus.

I think it is easy to be too unfocused starting out. Even this site, at first, was way to unfocused, and slowly but surely I am getting it on track. (I think it is an evolution, with time you will get it better and better)

But anyhow, great work on building your traffic base and good luck with the monetizing, I am sure you will kill it!

Reply

Grady Pruitt

These are all some great tips here!

Just to take your example on the commission rate, compare a $97 where you get 50% commissions to a 77$ product where you get 75% commissions. Though the second one is a cheaper product, you actually make almost $10 per sale more with it. So pay attention to that average rate of commission! :D

Thanks for sharing!

Reply

Steve Scott

For sure. In time you will also want to look at conversion rates. So if a product makes 10$ more per sale but sells at 2% less times per click, the other one could be better…but that is really getting into another topic. ;)

Reply

Fran Civile

Great information in your article Steve! I have read about drilling down before but have not been good at following up … Since following you in your AM$100K new direction I’m paying close attention and I can see the wisdom of following that particular bit of advice with the health and energy blog I have.

I tend to focus on healthy eating and exercise but also wander into controlling high blood pressure and other health concerns. I suppose I should start with limiting categories? What do you think?

Fran

Reply

Dee@ SmallHouseLife

Hi Fran!

I’ll jump in here.. I clicked your link but it didn’t take me to your eating and exercise site, so I’ll wing it based on what you wrote about here.

My answer is YES, limit categories because “healthy eating and exercise” are already super broad.

dee :)

Reply

Steve Scott

Fran,

I agree with Dee. IMO, your categories are super broad. Venturing into HBP alone there are quite a few topics. Controlling HBP naturally, Breakdowns of different medications (beta blockers, duiretics, etc), cardio exercises. A whole lot.

I would say that in your area you could be a “little” broad if you narrow your focus. Maybe something like “Healthy living after 60″ would give you a chance to talk about a broader spectrum of ideas with what would still be a narrow focus.

Reply

Astro Gremlin

Super analysis here, Steve. You make points I hadn’t considered. Making a Goldilocks niche site (depending on one’s passion) is just as easy (or difficult) as writing one that shoots for the stars and misses, or makes only pennies.

Reply

Steve Scott

Thanks Astro,

Finding just that “right” topic is certainly easier said than done, but it is that sweet spot where there is really opportunity. Thanks for dropping by!

Reply

alana

hi,
your post about the profitable niche is really nice and interesting.. the points which you gave is really useful..
many thanks for sharing this information..

Reply

ralph@cantankerousoldcoots

Steve,
It seems to me that these questions also work if you are creating your own products.

Reply

Bill

I think your niche criteria is spot on, but I think I agree more with Marius than you do. Blogging and creating informational products eats up time (especially when you want to become an authority). I think its pretty important to be working in a niche that you’re passionate about.

I guess I also had been working along the lines of Sean King who is working in an evergreen niche that has many micro niche opportunities. I know you believe its important to establish expertise in your niche before starting out in another one, but how do you judge the perfect time for you to enter a related microniche? Is there a dollar amount or just an “aha” moment when you realize the potential in a microniche?

Reply

Steve Scott

Bill,

I don’t argue that you need some degree of “passion”. Like you say…to do it “right” you will need to be in that niche for a long time. In fact for an authority site, I would say you should be expecting to write about it for 3 years to really establish authority within the niche. You certianly can’t hate what you write about that long.

As for microniches (as opposed to authority) I think it varies from person to person and experience level. Since some of these will be more hit and miss, I think the qualification to enter may be a little lower. But I would go with potential. Mostly # of searchs(exact match) and potential.

Reply

Dosumu Temi

Steve,we are not all pros.Pls how can one research a profitable niche with low competition.A detailed guide woul do,if you have an article on this,kindly refer me to it.Thanks

Reply

Ian Belanger@IM Graphic Designs

Hey Steve,

That is the best and most concise post I have ever read about picking a niche. I struggled with this for months when I first got started. To tell you the truth, I still haven’t really picked a targeted niche. Time to change that!

Thanks for sharing Steve and have a good one!

Ian from im Graphic Designs

Reply

jacoby

Hello Scott,
Just want to say that I am brand new at this internet marketing stuff but have been completely immersed in study for about a month. I don’t want to be motionless through paralyses but I want to be patient enough that I do my homework first and make sure I did my keyword research, potential profitability research, and competition research correctly before I dive in. I also want to make sure I don’t start doing all this on and off page SEO only to find out I was only hurting myself. I think it’s good to hesitate and make sure you got everything covered but you also have to know when to step out and take a chance.

I have already seen a lot of things I would have done wrong just from lsitening to one guy then hearing some else explain it one step further.

Just want to say that your blog and a few of your books have been extremely helpful so far.

Solid information here as far as I can tell.

Thanks.

Reply

Steve Scott

Thanks Jacoby! Glad I could be helpful… Please let me know if you need any advice about anything.

Reply

jacoby

Thank you, I wouldn’t actually bother you with this, but I actually do have one simple question.

What if you have a pretty close exact match domain name to your keyword. (it is exact but you had to add one short word on the end – I don’t know how the SE’s compute that)

The monthly searches for your domain name avg 6,600 and most of those are in the U.S. (an online buying counrty) and it is a heavy “buyer keyword”.

Plus there are lots of micro niches in your niche and they are evergreen with even higher monthly searches.

One of these micro niches has 27,000 monthly searches and some are global searches but it’s a digitably downloadable product.

Another micro niche has 200,000 monthly searches with a $1.24 CPC.

The avg PR for these on the front page of Google is about a 3.2 (averaging the top ten PRs) and many have one of the top three results on the SERPS ranking a 2.

Even though the CPC is not super high it seems the amount of traffic searching for a buying keyword might offset it. And being as the competition seems pretty week it might be worth the time.

Does my thinking sound right here?

Thank you for your time.

Reply

jacoby

Sorry, I forgot to mention that for each sale you might not make a lot. Like maybe one to three dollars.

Reply

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