Finding Profitable Niches - "HELP ME! WHERE DO I START?"

I receive a lot of private messages from Affilorama members and a lot of comments are made in the Affilorama forum from affiliates who are lost, confused, flustered and bewildered about where exactly they should begin. All the big questions, like: How do I find a topic? How do I know if it's a good topic? Should I use pay-per-click, or should I bust a gut on your SEO? And where does AdSense fit into all of this?

In other words, "HELP ME! WHERE DO I START??"

The first thing you must do is choose a good, profitable niche to focus on. Finding profitable niches requires brainstorming, research and cross-referencing, and your niche will determine whether you earn money by promoting affiliate programs or through context ads like AdSense, Yahoo or Kontera. It will also determine whether you focus on driving traffic to your site through paid advertising (ie. PPC ads like AdWords) or whether you work on your SEO so that you get picked up in natural search engine listings.

Not every topic can be marketed in the same way! You need to do your research so that you don't end up wasting time and/or cash on something that won't earn money!

In the next week I'll be adding another 4 - 6 video lessons to the Affilorama members area on finding profitable markets and keywords for your campaigns. In the meantime (and for readers who aren't members yet) here's a brief overview on finding profitable niches.

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There are a number of factors you need to consider when choosing a topic / market / niche for your affiliate activites:

• Is there a market for your information? ie. Are there people looking for this information or product?
• Are there any good affiliate programs for this topic?
• What is the competition like? Are people making money from this market already?

Which of these questions you tackle first depends on whether you already have an idea in mind, or whether you're looking for inspiration.

Is there a market for your information? ie. Are there people looking for this information or product?

Remember the good old tool, http://inventory.overture.com. This will tell you how many people are searching the Yahoo network each month for particular keywords and their related keywords. It's easy to go ga-ga over search terms receiving hundreds of thousands of searches per month, but remember that anything over 1000 per month in Overture is worth going for, particularly if you've got a cluster of related terms.

Are there good affiliate programs for this topic?

The Affilorama affiliate program directory is a good place to start researching potential affiliate programs to join, since it pulls results from a number of affiliate program directories.

When you're checking out affiliate programs, pay close attention to:

a) How much they're paying. I usually prefer products paying 60 - 75% commission. (Typically info-products like e-books rather than physical products. Info products are able to pay higher commissions.) But you could also find a high-price, low commission physical products to promote that will end up paying the same amount.

b) What is the sales site like? Is the product sales site likely to convert the traffic you're sending them into sales? Read through their sales pitch (or skim it -- most visitors to a page will typically read the headline, a few sub-headers and then scroll to the bottom of the page) and see if it convinces you. If the sales page for the product isn't particularly good, then you'll have to do a good job of pre-selling a product on your own page before you refer the traffic.

What is the competition like?

With a few exceptions, it's a good idea to go into markets where there is competition. Competition means that people are making money in this market, so it must be good. The thing to realize is that most people -- even the people at the top of the search engine listings -- will be doing a half-pie job. If you go in equipped with the knowlege, skill and mojo, you WILL be able to wiggle your way into the top 10. Maybe they won't have properly SEOd their sites or made them as "relevant" as they could be. Maybe they're wasting money on ineffective keywords, or they don't have a good clickthrough rate. Maybe you'll be able to create a more relevant landing page for your AdWords ad (so you pay less), or maybe you just make it so that your site converts better.

The thing I've discovered is that people typically won't fight back very hard once they start getting pushed out of the market. They will give up and look for easier markets. And while a lot of people will be doing an "okay" job, they're B-grade students at best. If you're an A student you'll be able to top them, and grab a piece of that pie for yourself :)

So the point here is, there's no need to be afraid of healthy competition if you know what you're doing.

Are there people making money on this already?

Just because a product looks good, this doesn't mean that you're going to make money on it. There are any number of reasons why your campaign might fail, so it's good to know from the outset whether it's actually possible to make money from this market. Particularly if you're thinking of paying for PPC advertising! The best way to check if it's possible to make money is to look at the competition. Are there people out there fighting for a share of the market? Are people spending money promoting this market? If people are spending money, then they must be making money. If they're spending a lot of money, then chances are they're making a lot of money.

The easiest way to see how much people are willing to spend on their traffic is to use the Overture "view bids" tool. (Go to www.Overture.com, enter your keyword into the search box, click on the text beneath a listing that says "sponsered listing" and then click on "view bids" in the window that opens.) Enter the keywords you're interested in and you can see how much each advertiser is paying for each click. You can then take a look at a few of these paid listings and see if they seem like affiliate sites, or if they're instances where the actual product site is advertising itself. If there are affiliates paying for advertising, and if these ads stick around for a month or two, you can be pretty sure that these guys are making money, so there's a good chance that you will too.

Another trick is to use the Google AdWords Site Related Keywords Tool to find markets where people are paying high amounts for search terms. (Take a big website with a lot of diverse topics on it and plug it into the "Site-related keywords" tab. Select "Cost and ad positions" and then enter a large amount into the "how much would you be willing to pay per click" box.) It'll pop up a list of words in a bunch of categories, and will display general guidelines for how much you'd have to pay to get into the top three listings for those words.

While this tool isn't so useful for figuring out how much you'll make in AdSense (since people can bid different amounts for results that appear on the search engine results pages and results that appear in context pages like AdSense sites) it's good for finding topics where people are willing to spend. Use this for initial brainstorming, then take your ideas into the Overture "view bids" tool to see what kind of sites are paying for these listings. Look for affiliate sites as opposed to actual product sites, and you'll see whether this seems to be a profitable niche.

The flip side is when you find a topic that is really highly searched for, but when you look at sponsored listings you don't see many people paying for clicks. To me this indicates that there might not be much money in the market. Perhaps people are looking for things, but they're not people who want to buy -- they just want information. In this case, a site that makes money on context ads like AdSense or Yahoo ads might be more profitable. Of course if you're only earning a small amount on average from each visitor, then it's certainly not going to be worth spending money on PPC. In this case you'd be better of SEOing your site and relying on organic traffic.

AdSense and Yahoo context ads: The tradeoff between number of searches and cost-per-click:

When trying to work out if an AdSense ad site would be profitable, you need to take a look at two things:

• How many people are looking for information on this topic?

• How much are people paying for traffic in this topic?

You might find a topic that is hugely searched for, but has quite low CPC. An example of this is the "hair styles" topic. Over a million searches per month are conducted on hair style related topics, but people are only bidding around 5c/click for paid listings This says to me that there's little to no money to be made in affiliate programs for this market, and were I to have context ads on my site, I'd get (around) 2.5c per click. Are you excited by 2.5 cents per click? Probably not.

But if I were to have a couple of thousand clicks on these ads per day, it might begin to add up to something substantial. So in this case, even though the CPC is low, I'm able to earn a reasonable amount because of the number of visitors I get.

The alternative is having a site focusing on topics that have quite high CPCs but might not get so much traffic. The good thing about finding these niches is that often you won't have so much competition from similar sites, so it'll be easier to get up there in the search engines. Try looking at B2B topics (visit www.thomasnet.com for ideas) -- very few people make websites on these sorts of topics, but they can be quite lucrative for AdSense or Yahoo ads.

Of course the best situation would be to have highly searched topics with high paying ads. Also remember that (when researching what people are paying for ads) the figure Google gives for AdWords ad position (in the tool I mentioned above) doesn't necessarily equate to what you'll receive through AdSense, since AdWords advertisers are able to bid different amounts for the results that appear on the SERPs vs. results that occur in the context of a page, and some choose not to have their ads appear in context at all.

A quick note on the "make money online" market:

A very high proportion of new affiliates choose to dive into the "make money online" market as their first attempt at affiliate marketing. There is a lot of money to be made in this market, but there also seems to be a lot more affiliates losing money here than average. Why?

• The competition is huge, and people who are selling in the "make money online" market are a bit more savvy in their efforts. Dive straight into this market and you're competing with the best.
  
• Most new affiliates try this market first. They haven't learned everything they need to learn, so they lose a lot of money learning these lessons. Maybe they stick it out, maybe they get disheartened and run away. In any case, there's a lot more experimentation and a lot more people screwing up in this market than you'd expect.

If you're new to affiliate marketing, I strongly suggest you get a little more creative and cut your teeth on a different market before you try to tackle this one. I know I said before that competition is a good thing to see in a market, but I also said there were exceptions. I call this one an exception!

SO HOW DO YOU FIND TOPICS?

The key to finding good, profitable niches is brainstorming, lateral thinking, and research. Visit lots of sites to get those brain juices going. Remember that most good sites are getting money from somewhere. For each site you visit, as yourself: how are they making money? Here are some good places to start your brainstorming:

• Search affiliate program directories.

• Get ideas for B2B sites from B2B directories. The good thing here is that it's all categorized for you already. Take some of these topics and plug them into the "view bids" tool in Overture to see what people are willing to pay, then use inventory.overture.com to see what the traffic is like. You might need to have a dig around until you find something suitable.

• Visit sites like About.com to get ideas. About.com gets money from advertisers paying for listing on their site, so they're not likely to create articles/topics that aren't profitable?

• Visit eBay and have a dig through their categories to get ideas for products/niche topics that people might be interested in. For instance, dolls. There are people bidding big dollars for dolls -- there's probably a doll-geek community that you could market to. (You could place eBay product ads on your site and earn a percentage of eBays revenue from successful sales, or for referring people who become eBay members.)

Affilorama members, keep an eye out for the new videos on this topic that will be going up in the next week or so. I'll walk you through the steps I've just mentioned so you can see some of this mystical "research" in action. Who knows what I'll dig up!

Alright guys, end of the week. It's beer 'o' clock!

Have a great weekend!

- Mark