Is Your Niche Market Profitable?
In this video you’ll learn:
- How to find a large & profitable niche using free research tools
- How to determine if your niche will be profitable in the long run
- Why you should not rush into building a site before validating the profitability of your niche
Is Your Niche Profitable?
To do this you need to understand:
- The general size of your niche and the potential traffic or visitors you can get on a monthly basis
- The amount of niche products available online and the spending power of your potential visitors
- The past and future growth trends of your niche market
So lets look at each one in details to make sure you will always be working on a profitable niche market.
The Size of Your Niche Market
As I mentioned in the previous video about finding a niche, your niche should be neither too narrow nor too wide. But how do you get a feel of how big it really is?
You can use a free tool by Google called Google Keyword Planner to get estimated monthly searches for the terms or keywords you need. This tool is part of Google’s AdWords program, so you will be asked to create an AdWords account, as well as your credit card information when you first use it. You will not be charged for using the tool.
Using the Keyword Planner tool, you can type if your main keywords and Google will show you the search volume.
Under keywords you have two different views:
- Ad group ideas – These are groups of related keywords, and it’s useful for you to discover related search terms. Some of the keywords groups may be useful, others may be not, but it’s Google’s way of letting you zoom out of your search term and sow you other “ideas” or possibilities.
- Keyword ideas – Here you will find more related terms, and these keywords will form individual pages of your niche website.
However, the volume of search only shows you the total size of your niche market. It does not indicate profitability.
Is Your Target Market Buying Online?
To determine if you niche market is profitable, you have to view by location and you’ll see something like this:
The rule here is simple:
If the majority of searches are from developed countries, your niche will be profitable. If the majority are from poor or developing countries, avoid this niche.
In particular, the searches should come from United States, United Kingdom, Australia, and Canada. These countries have a large population of online shoppers.
I have nothing against developing countries, but the fact is that people from these countries typically do not have a credit card, or do not use them to make online purchases. Their purchasing power tends to be lower so they also buy less.
Why is this important?
- If not one is actually buying products online in this niche, there will be less advertisers spending on ads across the Internet.
- For a niche marketer, this means that you can make less money (or no money) from displaying ads, or promoting affiliate products.
- Therefore, you may end up with a niche website that ranks well in Google and gets a lot of traffic, but your site will make very little money.
Can Your Niche Be Profitable For Years?
If your niche passed the profitability test above, there’s still one more thing you should consider: long-term profitability. One simple tool you can use to determine this is Google Trends.
Let’s say you decide to create a niche website or niche blog on HD camcorders. All the signs look good: lots of searches from the right countries. However, when I enter the term “hd camcorder” into Google Trends, the results are shocking:
This niche reached it’s peak in 2010, and declined drastically in the next four years. Could this be because smartphones got so good at taking and storing HD videos around 2009 – 2010, that no one really wants a separate camcorder anymore?
When I compare the term “hd camcorder” with “dslr camera”, the trends become even more prominent:
Are DSLR cameras are on the rise because most models can now also take stunning HD videos? Is the rise of DSLR cameras with HD video capability directly responsible for the demise of the camcorder?
Whatever the reasons, the danger in building a niche website on a declining niche is that your revenue and profits keep shrinking every month until you earn absolutely nothing. You should also be careful about niche markets that are on a plateau, because no growth is almost always followed by a decline.
By choosing a niche market that is growing, you can make more money online from your niche website. Sure, as the market growth there tends to be more competition, but it’s always better to be a small fish in a growing pond than a large fish in a shrinking one.
When you’ve done these few tests to determine if your niche is profitable, then you can start building your niche site.
The question now is: should you build a niche blog or a niche website? What is the difference between the two?