Assessing The Potential Of A Niche

Potential niche products exist all around us, in a previous tutorial we learned the basics of niche research, but how do you decide if a niche market is worth pursuing?

Here's a system that will give you a fairly good indication without having to spend large amounts of time and money on the task.

Step One

This is a fairly obvious step - Find out if other marketers are spending advertising dollars in that niche. If they are, you can be pretty certain that it's a profitable niche. Why? Because savvy marketers "don't" spend money on advertising that doesn't show a profit.

You can check this out quickly on the Yahoo search engine where advertisers pay each time someone clicks on their listing, this is called Pay Per Click (PPC) advertizing. The ads can be found down the right hand side of the search results page. Let's check out an example.

For demo purposes, and to maintain continuity, we're going to stick with "nail art" as the topic and search on the keyword phrases (without parenthesis " ") we used in the keyword research tutorial that follow:

There is fairly consistent number ads for the subject so money is being spent.

Now go to the SEO Book Keyword Tool and type in the three keywords (without parenthesis " ") one at a time. When the results appear check the column headed CPC at the right of the screen.

CPC stands for Cost Per Click - which is the estimated cost sellers/advertizers pay each time someone clicks on their ad. The higher the bid the more profitable (and competitive) the niche is likely to be.

In this case the top bids for the keywords (at time of writing) are:

Based on this we can be pretty sure that there is a viable market for niche products in these subjects.

Step Two

OK now let's take this a step further and find out what other search terms (keywords and keyword phrases) are being used to find our niche subject. Go to SEO Book Keyword Tool and type in each of our keywords/phrases (without parenthesis " "). This returns a list of monthly searches for each keyword including:

Keyword Monthly
Searches
nail art 198,000
nail art ideas 17,760
easy nail art 7,920
diy nail art 5,280
how to do nail art 4,320
migi nail art 4,320
toe nail art 4,320
cute nail art 3,480
simple nail art 3,480
easy nail art designs 3,480

The numbers indicate the number of times that each of those keywords/phrases have been requested in the a month.

Step Three

Next we need to find out how many competing sites there are for each of our keywords/phrases. We're going to do this on Google - but first we need to decide what number of competing sites is acceptable for our niche subject.

As with any subject, opinions differ widely.

Rosalind Gardner (Super Affiliate Handbook) does not consider anything under 100,000 competing sites to be a viable niche.

Jimmy D Brown (ProfitsVault.com) suggests 30,000 - 100,000 competing sites to be the ideal.

At the other end of the spectrum Andrew Williams a Search Engine Optimization expert looks for niches with 1,000 competing sites or less for each keyword/phrase.

For our example here I'm going to use Jimmy Brown's criteria : 30,000 - 100,000.

Now go over to Google and start entering the keywords/phrases from your SEO Book Keyword Tool search, taking note of the number of sites which are displayed. In the search box type allintitle: "keyword/phrase" for specific results, e.g. allintitle: "migi nail art").

Here's the Google results from the lists above :

Keyword Competing Sites
nail art 1,410,000
nail art ideas 97,600
easy nail art 45,500
diy nail art 50,000
how to do nail art 2,400
migi nail art 2,880
toe nail art 23,200
cute nail art 23,000
simple nail art 16,000
easy nail art designs 10,200

So what does this tell us now?

These keywords are non-starters:

The terms are outside our competing sites criteria (Though I would consider combining simple nail art and cute nail art). There are 3 individual search terms in the 30,000 - 100,000 range...

Result - It looks like we probably have a viable market niche.

Step Four

Finally we need to check the ratio of "supply" to "demand" for our keywords/phrases to make doubly sure the niche is worth pursuing. Here's how we do it. The formula is :

Google Results = Supply
_____________________

SEO Book Keyword Tool Results = Demand

The lower the ratio the less competition. Here's an example using our keywords/phrases :

Keyword/Phrase

Supply

Demand

Ratio

nail art ideas 97,600 17,760 5.51 : 1
easy nail art 45,500 7,920 5.68 : 1
diy nail art 50,000 5,280 9.67 : 1

So do we have a viable niche?

As we have already said, the lower the ratio the less competition you can expect in the niche and these three items are all low ratios. (In general I have found that keyword ratios of upto 20 : 1 are viable niches).

Based on the figures we see here (which are for demo purposes only) I would say that all three are worth pursuing. Whether or not the niche will make money will be down to how effective your marketing is and what you are selling.

Please note: This system is a rough guide only and has it's limitations. If you're really serious about this Niche marketing stuff you should invest in a specialist service such as Word Tracker which will provide a more comprehensive range of keywords/phrases than the SEO Book Keyword Tool returns and provide more competitive data analysis.

The number one resource needed by niche marketers is content, so in the next tutorial you're going to find a list of content resources to help with product creation.

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