Online Marketing Lesson 7: Niche Research

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The niche research process is slightly different from the market research one. If you remember well, the main difference between niches and markets is the fact that people inside a particular niche may not be interested in spending money with it at all.

During your niche research process, therefore, you will not be concerned with finding market demand (i.e., people willing to buy products or services), but rather groups of people that have a particular area of interest, and that look for information about that topic on the Internet.

You also have two possible approaches for your research here: the inside-out approach and the outside-in approach.

With the inside-out approach, you will start by creating a list with all the niches that you are passionate about. Start listing down your interests, hobbies, professional experience, areas of expertise and so on. Once you have the list, it will be a matter of finding out if enough people are also interested in that, how many websites are already trying to offer content in that niche and the overall profitability of the niche.

With the outside-in approach, you just invert the order of the events. You first try to find what people are interested in. Then you analyze the competition and evaluate the profitability inside each of those niches. After that, you filter out the niches that are not aligned with your own passions and interests.

Below we are going to cover the three stages individually.

1. Finding People’s Interests

One of the prerequisites for a successful blog or website is a focus on a topic that people are interested in. Writing about the “interaction of electric charges in quantum mechanics” sounds fancy, and perhaps it is a topic that you love, but are there other people interested in it? More specifically, are there enough of them? Would it be possible to make money with a website centered on that topic?

Here are some places that you can go to answer those questions:

Online Forums: Online forums and discussion boards represent a popular resource for people that want to find answers for specific questions, or to interact with other people that have similar interests. Search in Google for keywords related to the niche you are analyzing, and add the word “forum” to it. If you are analyzing the “quantum mechanics” niche, therefore, just search for “quantum mechanics forum.” Visit the first results and see the level of activity in those forums. How many members they have? What kind of questions and discussions are popular?

Related Blogs: With millions of blogs around the world, it would be difficult to find a niche that no one is covering yet. Even if your niche is new or unique, you could still judge the potential interest for it by taking a look at blogs on related or complementary topics. If you want to blog about computer CPUs, for example, you could investigate both the blogs that cover that niche directly and the blogs that cover related niches, including computer memories or computer graphic cards. How many readers those blogs have? How active are they?

Social Networks: Social networks like MySpace or Facebook are among the most popular sites on the web these days. Creating an account with them is free, and you can browse around looking for what people are talking about, what kind of groups the users are creating and so on. Additionally, you can try to find smaller and niche focused social networks, which would indicate a reasonable amount of interest on the topic. For instance, if you are planning to start a website about dating for plus size people, finding active social networks focused on that niche would confirm that there is indeed a big audience for it.

Social Bookmarking: Social bookmarking sites allow users to submit stories themselves, and to vote those stories up or down. The stories with the highest number of votes usually get promoted to the front page, receiving a lot of attention and traffic. Taking a look at those sites could prove fruitful if you are trying to find popular topics and ideas for your niches. Some of the most popular social bookmarking sites are Digg.com, Reddit.com and Delicious.com.

Google Trends: Google Trends will allow you to compare the overall “interest level” on different niches. For example, if you type “ipod , zune” you will see that the Apple’s iPod is immensely more popular than the Microsoft’s Zune. Secondly, Google Trends is also very useful to see the evolution of the interest level around a particular keyword or niche. If you type “twitter” there, for instance, you will see the exponential growth that the term has seen over the past year.

Search Volume: While Google Trends is useful for comparing the overall level of interest among different niches and terms, it will not reveal the exact search volume of a specific keyword. You can find those numbers with keyword research and suggestions tools, though. Try the AdWords Keyword Tool and Keyword Country.

2. Competing Websites

The existence and size of a potential audience only tell us half of the story. For example, suppose you love portable music players. It does not matter which company produces them, so two niche options for you would be the iPod and the Zune. Now, after using the AdWords Keyword Tool, you discover that the term “ipod” is searched around 25 million times every month while the term “zune” is searched only 4 million times. Obviously, therefore, there are much more people interested in the iPod than there are people interested in the Zune. However, does that imply that the iPod must be a better niche? Not at all! It depends on how many websites are competing to get the attention of those iPod lovers, and here are some places that you can go to gauge this:

Google’s Index: If you consider the number of indexed pages by Google for each of those keywords, the picture is another one. Google indexes 382 million pages that talk about the iPod while it only indexes 30 million pages that talk about the Zune. The term iPod is a more popular one (by a factor of 6.25), but the competition around it is also immensely larger (by a factor of 12.73). Another way of seeing this is with the ratio of monthly searches per competing web page. The higher the ratio, the more appealing the niche. The iPod has a ratio of 0,06 monthly searches for each competing page on the Internet while the Zune has a ratio 0f 0,13 monthly searches for each competing page. For each website that talks about the Zune, therefore, there are twice as many monthly searches than for websites that talk about the iPod.

Blogs: There are estimates that over 100,000 new blogs get created every day. If you are going to create a content website, therefore, a great part of your competition will come from blogs. There are two tools that you can use to get an idea about the number of blogs in a certain niche. The first one is Google Blog Search, which is Google’s blog search service. The second one is Technorati, which is a blog tracking service. The first one will include both blogs and blog posts on the results page while the second one allows you to specify if you are searching for blog posts or blogs exclusively.

Google PageRank: Apart from finding how many sites or blogs are competing in a given niche, it is also a good idea to evaluate how strong and trusted those websites are. Here is why: entering into a niche that has 100 small and relatively new blogs would be easier than entering a niche that has 10 very strong and established websites. Google PageRank is a numerical value assigned to each website that gives an indication of the trust that Google has on that site (which in turn is based on the number and quality of backlinks that the website has). The scale goes from 0 to 10, and the higher the number, the stronger and more trusted the website. You can download the Google Toolbar to be able to see the nominal PageRank of every website. Another option is the Search Status extension for Firefox.

Compete.com: Another factor that you can take into consideration when evaluating the authority of the competing websites is their traffic levels. Obviously, the higher the number of visitors that they already receive, the harder it will be to establish yourself in that niche. Compete.com is becoming one of the most reliable traffic tracking services these days. You just need to type a domain name and it will tell you how many unique visitors per month that website receives, with a graph illustrating the traffic trend over the past months or years.

RSS Subscribers: Finally, you can also try to identify the number of RSS subscribers that the competing websites have. Most of the established blogs will display this number using the Feedburner widget. It is a useful tool to find the blogs with the largest RSS readership in any given niche.

3. Profitability

The last step in your niche research process is to evaluate the profitability of the niches that you are considering to pick. Remember that having passion for your niche is the most important factor. In the end, you might have a list of two or more potential niches where you are equally passionate about, and the profitability of each of those niches could be used as a tie breaker.

AdWords Advertisers: The main monetization method for content websites is advertising, and the potential advertising income is closely related to the overall number of advertisers interested in a given niche. One way to access this number is to search in Google for keywords that are related to your niches and check how many “Sponsored Links” will appear. Try repeating that search many times to see if different advertisers will pop up. Secondly, you can also use the AdWords Keyword Tool to view the “Advertiser Competition” level for each keyword.

Cost Per Click: Apart from estimating the amount of advertisers inside a niche, it is also important to discover how much those advertisers are willing to pay for their ads. One way to do this is to create a Google AdWords account (which is free but requires a valid credit card). Inside the advertisers control panel, you will be able to create a new campaign and add several keywords to it. For each keyword, you will be able to see a “first-page bid estimate,” which is an estimate of what the top advertisers are willing to pay per individual click coming from visitors that used that search query.

Affiliate Offers: Affiliate marketing is another common and efficient monetization method for content websites. The potential income here is again connected with the number of offers available in the market, and with the commissions that you can earn per sale. Both CommissionJunction.com and ClickBank.com are very popular affiliate marketing networks that can be used to investigate those numbers. You will be able to see how many affiliate offers are available on each niche, and what kind of commissions they pay. On Commission Junction, you will even be presented with the EPC (earnings per click) of each offer, which is a more reliable metric to evaluate the profitability of that affiliate deal and niche.

Action Points

  1. If you have not already, make a list of potential niches that you have passion for. Start with any topic that interests you, hobbies, professional experiences, areas of expertise and so on.
  2. Browse the Internet and evaluate how many people would also be interested in the niches that you listed. As we covered in this lesson, you can visit online forums, social networks, social bookmarking sites and so on.
  3. Use the websites and tools mentioned in point two to discover how many websites are already competing in that niche, and to analyze how strong and established those sites are.
  4. Create an account with Google AdWords and explore the cost per click of different niches and keywords. Then browse the marketplaces of Commission Junction and ClickBank and examine the amount and quality of the affiliate offers related to your niches.

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