Potential niche products exist all around us, but how do you decide which ones are likely to be worth pursuing?

Here's a quick method that will give you a pretty 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 "Pay Per Click" search engines like Overture and 7search where advertisers pay each time someone clicks on their listing.

Let's check out an example.

For demo purposes I'm going to search on the keyword "snoring" because I have a project in progress on the subject of "how to stop snoring without surgery".

Now go to http://www.content.overture.com/d/ and type in "snoring". When you arrive at the results page click on "View Advertisers' Max Bids" at the top right of the screen. A new window will open up asking you to enter a code to access the information. Enter the code and submit it. On the page that comes up you will find the bidding range for our search term - the higher the top three bids the more profitable (and competitive) the niche is likely to be.

In this case the top three bids on Overture (at time of writing) for the keyword "snoring" are : $1.50, $1.47 and $1.46 - based on this we can be pretty sure that there is a viable market for niche products on "snoring"

Step Two:

OK now let's take this a step further and find out what search terms (keywords and keyword phrases) are being used to find our niche subject on Overture.

Go to : http://inventory.overture.com/ and type in "snoring". This returns a list including :

snoring 27352

stop snoring 8211

snoring cure 3308

snoring remedy 2366

cause of snoring 2186

snoring treatment 1233

snoring solution 1133

snoring problem 800

prevent snoring 623

... and a whole lot more. The numbers indicate the number of times that each of those keywords/phrases have been requested in the previous 30 days.

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 (Nicheology)suggests 30,000 - 100,000 competing sites to be the ideal.

At the other end of the spectrum Andrew Williams (Keyword Results Analyzer - Word Tacker Version) looks for niches with 1,000 or less competing sites 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 http://www.google.com and start entering the keywords/phrases from your Overture search, taking note of the number of sites which are displayed. (Enclose your keywords/phrases with " for specific results, e.g. "snoring cures").

Here's the Google results from the list above :

snoring 977,000

stop snoring 121,000

snoring cure 3,850

snoring remedy 24,100

cause of snoring 2,310

snoring treatment 6,660

snoring solution 21,100

snoring problem 18,500

prevent snoring 3,510

So what does this tell us now?

The first keyword "snoring" is a non-starter. The term is well outside our competing sites criteria at 977,000 and a far too general.

There are no individual search terms in the 30,000 - 100,000 range, but that doesn't rule it out as a viable niche, the term "stop snoring" isn't too far out of the ball park and we can combine some of the other keywords/phrases to meet the criteria.

Result - 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)/Overture Results(Demand)

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

snoring : 977,000/27352 = 35.72

stop snoring : 121,000/8211 = 14.73

snoring cure : 3,850/3308 = 1.16

snoring remedy : 24,100/2366 = 10.19

cause of snoring : 2,310/2186 = 1.06

snoring treatment : 6,660/1233 = 5.40

snoring solution : 21,100/1133 = 18.62

snoring problem : 18,500/800 = 23.13

prevent snoring : 3,510/623 = 5.63

So do we have a viable niche?

Based on the figures I would say the subject has pretty good potential. The niche is tightly focussed and the level of competition is low, so it's worth pursuing.

Will the niche make money?

The answer to that question will be down to how effective our marketing is.

One final note : This system has it's limitations. If you're really serious about this Niche Marketing stuff you should invest in some specialist tools which will provide a more comprehensive range of keywords/phrases than Overture returns.

Copyright 2005, Andr Anthony Niche Market Know-How

Andre Anthony

Andre Anthony has been running his own niche businesses on and off the Internet since 1983. He owns and operates Niche Market Know-How a resource for beginning Niche Marketers, where you will find strategies, tips, tools, products and resources for effective niche marketing.