When I started out in internet marketing, I browsed around various lists of high paying keywords as well as some arbitrary lists that veterans just decided to share [without explanations] on their blogs.
The problem with lists that have no explanations is that they require you to assume that
a) You can enter these niches and compete successfully in them, despite being a newbie; and/or
b) The person who compiled the list is infallible.
While I was fortunate enough not to try and start a mesothelioma made-for-adsense site (Omg omg omg! $50 CPC guys! Get on it!), I somehow made the even dumber assumption that the ‘guru’ who compiled my list was infallible. Of course, I didn’t realize I was making that assumption at the time, so I happily went off to make my fly fishing site.
To put that stupidity into context, Wikipedia only ranks 6th for Fly Fishing, despite having 5000+ links to that page, per Yahoo Site Explorer (Y!SE). (No, I don’t think it’s because Wikipedia is suffering from a position 6 penalty ;-)… unless this is a renewed push of Google Knol? But I digress…)
One of the most popular questions you always hear from people who are new to affiliate marketing is what niche should I get into? So here’s my contribution to help out newbies get into the game with their eyes wide open.
I’ll share my methodology in researching and picking a niche, and my reasoning.
And because it’ll have explanations, you’ll hopefully be able to think critically about whether my methods are any good, whether they’re any good for you, etc.
(As an aside, I’m writing what I hope will be a little book on advanced SEO, and one of the themes is about how critical thinking is key. That’s largely the inspiration for this post.)
Question: What makes for a desirable niche?
Answer: The level of competition is not beyond your abilities to handle, there’s sufficient potential return on investment (ROI) and you can come up with a point-of-difference.
If the competition is too strong for you, then you’re wasting your time. Why play tennis against Roger Federer when you can play against your kid cousin?
If you can’t make much money, you’re wasting your time.
If you can’t be unique, you’re not necessarily wasting your time but you are vulnerable.
It’s also a nice-to-have to be passionate about the particular topic/niche, especially for newbies. For many newbies – and this was my experience with fly fishing – it’s challenging to stay motivated when you don’t care much about a topic. But it’s not absolutely necessary if you can motivate yourself sufficiently by thinking and constantly reminding yourself of the money the site will make.
Question: Where do I start my search for these lucrative niches in which I can compete and differentiate myself?
Answer: Go to the affiliate networks, and browse around the merchants they have.
Question: What do I look for amongst the merchants?
Answer: You want to start by finding something with a low level of competition.
I like to look for categories that are unlikely to be popular amongst men or amongst tech savvy marketers. The reason is that a majority of affiliates and business owners are men (see eg the Inc 500). By avoiding overpopulated topics like sports or technology, you avoid A LOT of competition.
For similar reasons, categories that appeal to an older crowd are likely less competitive than those appealing to younger people. Anyone who was at Affiliate Summit earlier this month can tell you that gray hair was pretty rare there.
That said, it depends on your confidence in your own skills and determination to succeed. If you know yourself and feel you can rank for ‘new laptop’ – be my guest and consider that niche more seriously.
Question: I’ve found some categories that fit your description. How do I check if they’re really low competition?
Once you’ve found what you think are some low competition categories, visit the merchants’ homepages. Read their title tags. There, you’ll find the most valuable short tail keywords in the niche.
Plug those keywords into Google and evaluate the competition.
Personally, I prefer to compete in niches where a majority of the top 10 rankings sites have fewer than 10,000 inbound links, per Yahoo Site Explorer. Even better if they’ve mostly got under 5,000! As to links to the pages themselves, I like to see link numbers below 500. To facilitate this, I use SEO for Firefox.
You can also try using Majestic SEO, but you’d need to do research on the ratio of links reported by Majestic vs links reported by Yahoo. Majestic reports many more.
Question: OK, so I’ve got a niche I can compete in. How do I see if the ROI is worth it?
Answer: The formula for potential ROI is simple: Traffic x [Potential] Revenue Per Visitor* = Total Revenue. Total Revenue / Costs = Potential ROI. It will be expressed something like X dollars earned for Y dollars spent.
This is valuable for comparing two potential niches. But you also need to consider Total Revenue, because if you can find a niche with a $10/1 potential ROI, but you can only make $100 Total Revenue, you should move on.
The threshold for ‘minimum Total Revenue’ before you consider a niche is completely up to you. I’d love to say ‘shoot for $500/month Total Revenue’ or something like that, but the truth is this totally arbitrary.
I laid all that out in my step-by-step guide on how to forecast SEO ROI. Unfortunately, I don’t think it carries over very well to PPC, because a big part of PPC is buying traffic on longtail keywords (especially as an affiliate whose EPC is lower than that of the merchants).
Question: What’s a point of difference and how do I create one?
Answer: Also known as a ‘unique value proposition,’ it’s what sets you apart from all the other affiliates in your niche. It’s the answer to the question: “What prevents me from being classified as a [thin] generic affiliate?”
Valuable product-related tools or services.
Mashups with maps, user generated content, etc.
Unique content (but this is becoming commodified, so this route is getting harder and harder to use.)
Other imaginative means. Just ask Rae.
*Revenue Per Visitor is more commonly called Earnings Per Click, or EPC. This is a key metric, because what affiliates have to sell to one merchant or another is their traffic. You want to sell your traffic to whatever merchant will pay the most!