7 Steps to Find Profitable Niche Topics And Generate Passive Income
I was going to write about something different today, but a couple of questions were asked in the keyword seed list post.
One of them was from the great Robert Dempsey from itinerantentrepreneur.com. He asked “How are you determining if a potential niche could be profitable?”
I love this question, but the answer really depends upon a number of things. Well, there is one main thing and then a bunch of other, smaller things. The big one is:
Are you willing to spend money to find a profitable niche?
If your answer is yes, then testing with AdWords is one very common way to try things out. Find a keyword that you think is a buyer keyword (more on that below) and pay Google for clicks on that keyword.
If you do this, your ad will be placed in the sidebar for searches on your keyword. Many people do this for several keywords at one time to see which of them perform the best, then target that keyword as the main one for their profitable niche site.
It might sound simple to just do this and make millions, right? Well, that has not been my experience. Actually, I like to say “no” to the question at hand as I am really quite cheap.
Talking About Traffic Generation Already?
Well, yeah. Without enough targeted traffic, it does not matter how nice your site is, or how well you write copy.
Good traffic + Good presentation = Good sales.
So, I will be mentioning traffic here and there throughout this post. Generating enough traffic to make sales is a big part of the ‘is it profitable or not’ equation for markets, niches, and keywords.
Side note: Not quite ironically, targeted traffic plus (relatively) low competition seems to be the reason that “traffic generation” is one of the biggest growing Internet Marketing niche markets around right now.
If you answer no, then the need for just enough targeted organic traffic to make some sales is required. This is where you want to be – getting just enough traffic to accomplish your goals. But before we get carried away, we need to find a market.
Find A Profitable Market
There are tons of opinions out there about the best way to find a profitable market. Most of them include one or more of the following:
- Start with what you know (or are interested in learning)
- Look at Google trends
- Watch Social Media outlets like Twitter
- Do keyword research
- Look at blog directories
- Look at the magazines listed on Amazon
But, this seems to be missing the point. All of these (except the first) will tell you if people are writing about something, and possibly searching for it as well. But they won’t tell you if people are buying (i.e., if you are going to find a profitable niche topic). Having said that, your knowledge, trends, social media, keyword research, etc. CAN have a measurable effect on how many sales you make.
One huge mistake you can make right now is to go to a site like Google Trends and choose to sell whatever is in the top 10.
Actually, as I am writing this, #7 is libya and #8 is lybia. Oddly, “how to spell Libya” is not in the top ten.
Anyway, don’t get me wrong. Using these as starting points to find a market does make sense. But, using them is only one small part of your research.
Example:
For example, as I mentioned last week, there are a bunch of places you can go to find a starting point to build your keyword list.
Amazon.com is probably my favorite for looking for profitable products, but finding your market first will help you to make it easier and more profitable. This is because finding a good profitable market first could allow you to find MANY niches/product ideas for your portfolio of websites.
The places that I mentioned are also great for finding a profitable market, but so is just thinking about what you already know.
So, I am going to find a market first. To do this, I will think about a group of people who have a bunch of cash. How about doctors?
Find Profitable Niche Topics
Ok, I am going to explain what I do to break down markets that are likely to be profitable so that I can find a profitable niche.
We know that markets are made up of one or more groups of people who have something very specific in common. Perhaps it is that they like Water Polo, or that they all have won the lottery.
Finding a niche topic is fairly easy. Water Polo players are likely interested in the latest news about water polo balls, swim suits, and swimmer’s ear drops. Lottery winners are probably interested in investments and ways to keep their family from killing them (it is a tough world, isn’t it?).
You want to think about the market’s interests first as Google’s data can not truly be validated and because much of the reason that people will click your link has to do with how you present it (i.e., what you are using for anchor text). You and I could both try to market a product. But one of us will make decisions that creates more sales. That has less to do with historical data than it does current decisions of design and user intention.
Example:
Above I thought about markets and came up with ‘doctors’. Pretty broad, right? Well, now I am going to narrow that to come up with a niche. Here is my thought process:
What do doctors do during their time off? Well, I know a few doctors, and they all seem to have a few things in common. For this post, I am going to use my friend’s interest in computers as a starting point. Ok, so the niche is “computers for doctors”.
Obviously, that is terrible and needs to be drilled into further. Two of the (few) doctors I know use Lenovo Thinkpad computers and love them. Hmm. I have a feeling that market is saturated, but what about the batteries?
With a quick Google search, I came up with a model of the computer (R51). So, that will be my niche for this example, replacement batteries for the R51.
Finding Buyer Keywords
For as much flack as Google Instant took when it was introduced, I believe that it is one of the most helpful tools in the quest to find a profitable niche market. People buy stuff to solve problems and Google provides search for people to find what they need.
Ha. Sorry, I need to stop. That last sentence is like saying that news organizations work hard to provide the facts of current events and don’t spin the facts to please their audience.
Anyway, it makes sense that there could be keywords or parts of keywords that can be used to find buyers in any niche. A few ways of doing this come to my mind:
- Think about motivation. What is it that is motivating someone to want to buy whatever it is that you are thinking about selling? Do some keyword research and see if you can find a few phrases that look like they are motivated by something. In our example, someone’s computer may be running out of power after only a short time. So, our seed for out keyword research could be “replace Thinkpad battery”.
- Buyer and review. Pick a single product and use Google’s keyword tool. If there are people searching for a specific product models, then it is likely that at least some of them are looking to buy. If you can find these “buy” or “review” in the results and there is low enough competition, then you may soon find a profitable niche.
- Find a highly searched or talked about model number or manufacturer name. This one is not so much fun, but there are many marketers who use this strategy to create their sites. You can find these on forums and by looking at the popular products pages of Amazon, ebaY, etc. For our example, we will limit our research to batteries for the R51.
- Type a seed into Google Instant. I won’t show this as part of the example, but it is often a good way to find other keyword seeds, and sometimes other niches.
Summary of My Profitable Niche Search Process
- Pick a market. This can be random as I have done for illustration, or through hours of doing Internet searches to learn about a particular group of people.
- Find good seed keywords. This is what I wrote about last week. Basically, what does this market want to know about or buy? Use the seeds to create a keyword list. This is your starting point.
- Check your keywords with Google’s keyword tool. This is by no means perfect, but check your keywords’ profit per click and cost of paid traffic. Chances are, if other people are willing to pay for clicks on these keywords, you might be able to make some money in that niche.
- Look for products in Amazon, Clickbank, etc. Look for >$100 or for a product that you think there would be a large market for. And, make sure that the products are things that you would not mind getting via the mail, or digitally. If you find enough winners, you may be on to something.
- Do keyword research for products from 4. Especially look for “buy <product>” and “<product> review. Add these to you keyword seed list.
- Categorize your keywords. Is this one that you would use to buy something or just to find info? No research for this one; just use your brain.
- Build your site and generate some traffic.
Example:
Ok, so the first thing I need to do is pick a market. Done. That is “doctors who like computers”.
Next, I need to find some seed keywords to use in my research. For this I am going to go to Amazon.com. I searched for “Laptop batteries” and found that there is a category for this. Then I searched on “Thinkpad R51″ and found that there are at least 40 batteries that could be promoted. Unfortunately, they are fairly cheap (around $30 USD) and there are not many reviews. A few of them have between 3 and 10 reviews, which is ok, but not ideal. This just does not look to be profitable enough, so I would probably not pursue this for a niche site in real life, but it will do for this example.
In the descriptions and reviews on Amazon, I am going to pick out some phrases that I think sound like they could be searched on by people looking to buy one of these products. Here is what I came up with:
- 4 hrs of power
- aftermarket battery
- battery capacity
Next, I went to Google’s Wonder Wheel and typed in “IBM Thinkpad R51 battery” and found the following:
- replacement ibm thinkpad r51 battery
- ibm thinkpad r51 external battery
- battery ibm thinkpad r51 laptop
- lenovo thinkpad r51 battery
One thing you may notice here is that I started with “IBM” in my seed. That is because I know that IBM’s laptop division was purchased by Lenovo (a computer manufacturer in China) a few years back. Really, I could have just left it out.
Anyway, the next thing I will do is run each of the results through Google’s keyword tool to try to see if there is any profit to be had with these keywords.
“4 hrs of power” yielded no results, but “hours of power” gets 9,900 monthly searches and has very low competition. The problem I have with that is that it is not very targeted. Ranking highly for “hours of power” could bring in people looking for things other than a Thinkpad R51 battery. At least I learned a little about what this market cares about. I would probably use this in my copy, but not try to rank for it.
On the other hand, “aftermarket battery” led me to “replacement battery” and “rechargeable batteries”, both of which get a good amount of traffic. The competition is a bit more difficult, but still does not look too bad. Also, the cost per click is not real high.
“battery capacity” not only looks like a good keyword, but is also a great seed. The keyword tool shows a few really good candidates like “battery charger” (1M monthly searches, medium competition, and $1.40 CPC), and “how does a battery work” (8,100 monthly searches, low competition, and $0.54 CPC). These could be used for ranking. Plus, the second one could be used for an ezine article or Squidoo page which point to your (increasingly) profitable niche site.
When I went to look at the keyword seeds I found with the Wonder Wheel, I found that nearly every single word generated by the keyword tool is awesome. Some of the higher competition keywords could be used on a Sqidoo page, and the rest could be used on the niche site to rank in Google.
But, more importantly, it looks like there is a significant search amount for this niche and that it will be profitable (if only the price tag were higher).
So, I would end up with a list of keywords in the following categories and throw everything else away.
- High Search, High Competition – I would use these in Web2.0 pages with high PR.
- High Search, Low Competition – I would use these on my niche site.
- Medium Search, Low Competition – I would use these on my niche site, but not as something that I would consciously try to rank for.
The Bottom Line: Finding the best way to use keywords that are not too hard to rank for can be difficult, but it is the key to enabling you to accomplish your goals.
So, what are you sitting there for?
I would love some feedback on this post, but after that, crack open Market Samurai and get to work!
Bonus – Here is a pdf with this article and a list of keywords that can be used in your research to find good buyer keywords, which could help you to find a very profitable niche.
Have a great day. 
What do you think?
- What steps do you take to determine if your next niche will be profitable?
- Do you believe that there is a bullet proof method to find a profitable niche?
Profitable Niche Photo Credits
photo credit: olishaw
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Twitter: rdempsey
said:
Hi Mark fantastic post! I appreciate you answering my question in thorough detail. Now if you can just tell me how to sit on my butt, do nothing, and makes tons of cash I’d really appreciate it. And don’t skimp on the details!
To answer your question I don’t think there is a bullet proof method. Much of it is research and testing, while keeping your investment as low as possible. The research part is critical though, as a purely numbers approach doesn’t equal success.
I agree too that Google may not be giving us the most accurate information on traffic. Right now my strategy includes a combination of audience research (1-2 weeks), keyword research (3-5 days), paid/organic traffic to a survey (3-5 weeks depending), and competitive research (2 weeks). If after all that I have better than good indications I can make money in a niche, I really build out the site and put some more money behind it (articles, link building, potentially more paid traffic, etc.).
That’s how I roll. Minimal and strategic investment up front, which saves a LOT of time and money in the long run.
Robert Dempsey@Internet Marketing Strategies´s last [type] ..Niche Site Strategy For Online Domination
Ha! Well, that is easy.
Outside of moving to an island with no people and an excellent Internet connection, there is no solid answer for that.
That is the funny thing about our time. There is so much demand for it that it seems as though things would never get done. But they do.
Plus, I have a feeling you are doing just fine.
The “little bit of everything” seems to work best. I actually put up a couple of niche sites without having done proper niche research.
The result? Well, I did not find a profitable niche in those cases.
By the way, your point about surveys is significant. Surveying your market can be an incredibly helpful part of research for long-term, authority sites especially.
I guess the take away there is to know your audience before you begin marketing to them.
Thanks for the question and great comments Robert!
Twitter: lavenderuses
said:
Hi Mark
Wow plenty of information for me to take in and absorb here. Thanks for going into so much detail. I will be reading this through again to make sure I haven’t missed anything.
I am just at the beginning of the journey of affiliate marketing and am going to build a site when I have sorted out my products, so this is on topic for me. Enjoyed the post. Thanks Mark.
Patricia Perth Australia
Patricia@lavender oil´s last [type] ..Create Impact- Not Traffic Spikes
Hi Patricia,
I am glad you found it useful. One thing to keep in mind – there are so many ways to “find a niche”, and this only shows one of them.
Also, depending on the market you are looking to work in, some of the things I mentioned will not be optimal.
Of course, Google is your friend at that point. The most important part of all of this in my mind is getting to know your audience.
Good luck and have a great day!
Twitter: sallyneill
said:
Hey Mark,
VVVVVRRRRRRROOOOOOOOOOOOOOOMMMMMM!
That post just went wayyyyyy over my head lol.
I don’t do niche markets so I don’t research them, the end lol.
I wonder have you tried facebook ads, I only ask because so many people seem to be raving about them.
However if I did decide to do niche marketing, then yes I would be willing to pay first, and no I don’t think there is any surefire way or bullet proof method to choosing one, but if I ever find it, I won’t be blogging about it ha ha ha.
Sally
Sally´s last [type] ..38 Year Old Webinar Virgin Seeks Experienced Partner
Ha! Hey Sally,
That title you linked to is the best post title ever.
A M A Z I N G
I love that you answered the questions too. Nice to see you.
Have a good day!
Twitter: adriennesmith40
said:
Hey Mark,
Wow, what a post. So detailed and great explanation of researching a niche. Thank goodness I’m not doing that at the moment but will definitely revert back to this post should the need arise. You really spelled it out for us.
I definitely don’t think there is really any bullet proof method because I’ve heard so many different ways people go about this. I guess it is whatever works for them. If you do come up with one I would hope you would share that with us as well.
Adrienne
Adrienne´s last [type] ..Damn Those Hackers- Don’t Let This Happen To You!
Hey Adrienne,
Yep, there no bullet proof method that I am aware of. The great thing about this uncertainty is that very often you will find that there are other niches that you may not have thought of when you started your research.
And, you are right. Everyone does niche research differently. If everyone did things the same way, there would probably be very few winners.
Have a great day!
Twitter: liveurlove
said:
Hey Mark, what a post.
I am pretty much sure that most of my online friends know that I am a fan and user of Site Build It that makes this process like 95% easier and 100% bullet proof.
Their tools are so precise that I have yet to see a failed keyword research. I remember when I was doing my first brainstorming there and had my heart set on a niche. The tools showed a more profitable one and I decided to go with my heart.
They even had an estimate how much longer will it take me to make money with it. Do I need to say the tools were completely right.
I guess I am trying to say that your process is great although much harder than what I had to do.
Can Market Samurai do all that for you , without digging through Google’s tools. I don’t find them 100% accurate.
When it comes to you explaining the process and everything, I have to say -Wow, way to go!!!
Brankica@Blogging for beginners´s last [type] ..What is nofollow Is all this fuss about Google PR annoying you
Hi Brankica,
I have not heard much about the tool you mentioned, so I appreciate the recommendation. And, 100% is pretty good.
As far as the process I described goes, the keyword research takes about 10 minutes. Perhaps it sounds more difficult because of the number of words I wrote.
In my opinion, the real difficult part of keyword and niche research is understanding your market well enough to be able to build a site that will be effective. Personally, I prefer to use as many sources of information as possible.
Regarding Market Samurai, it is a very solid keyword research tool that can also help you also find products, post topics, where to get backlinks from, how well sites rank in the search engines relative to each other, and a few other things.
Market Samurai does offer a free trial and there are no recurring fees, which I love (yep, I am very cheap).
I have been very happy with it as it has made my life so much easier.
Having said that, I may give the tool you mention a test drive if there is a way to try it for free.
Thanks for the visit and recommendation!
Twitter: AboriginalMama
said:
Wow! For this post, all I really have to say is, “I’ll let you know my results after I try it!” This was surprisingly in-depth, with even more examples and explanations. I’m one of those that can explore a concept to death in my effort to really understand it. This actually got through to me! Keywords have been such a mystery, and I don’t think I’m very creative with alternatives.
This helped a lot!!
Delena
Delena Silverfox@Coupon Codes´s last [type] ..Hostgator Coupon Code
That is great Delena. This is just one way to do things, and it can be as involved or as simple as you want it to be.
Of course, the more time you put into research and using the results of your research, the better.
Have a great day!
Twitter: givejonadollar
said:
I think finding a profitable niche is one thing, but promoting it is quite the other. I’m glad you pointed out things like Adsense, because simply commenting on blogs and forums is just not enough.
Of course, you can try to write good content and hope people share it, but that is a double edged sword as well.
All in all, nice article here.
givejonadollar´s last [type] ..Pimpin aint easy- but it sure is Fun – ode to Matt Hottenstine
Hi Jon,
It can be difficult to generate traffic, though it really depends on your niche. In IM, there is so much good competition (and so much more that you don’t need to worry about) that it is near impossible to rank highly for some of the better keywords. Having said that, it is not impossible.
For smaller niche sites, at least as far as competition goes, it is much easier to compete.
But, you are right. It is easier to pay for traffic & paid traffic can be additional traffic for you if your keyword strategy is well thought out.
I do have reservations about using paid traffic as a main source. But then, any source is questionable over time. As such, I tend to use a combination of as many sources as makes sense.
Thanks for the comment & have a great day!
Twitter: Bomb_hipster
said:
Hey Mark,
Totally awesome post!
You really stuffed this one to the max. I plan on starting my affilate marketing journey when I build up more traffic to my blog. I will most surely be coming back to this post, because some of it went right over my head. I know if I re-read it when the time is ready it will become perfectly clear.
Thanks again!
God bless,
William Veasley
William Tha Great´s last [type] ..My Trusty Pen and Paper!
Ha. Hi William,
Yeah, it does take a little bit of time.
If you check out the 90 days to a better blog page, it has links to some posts that can help you get most of the concepts you need.
Good luck and have a great day!
Great post I never though about going over to amazon to find profitable niches and this is actually my first time time hearing about the Google wonder wheel, I’ll be sure to implement these into my up coming projects.
Hi Jurrell,
I am glad that you found it useful. Have a great day!
Hi Mark, Good to be here via Eveyln’s page,
very informative pieces here spread all over.
I just finished reading two, and will surely
come back soon to find more info. Keep us
info. I agree that twitter is a good place to find profitable niches.
BEst regards
phil
P V Ariel´s last [type] ..Some Delighting- Amazing And Unknown Facts About My Native Land—Kerala—Commonly Called or Known as “God’s Own Country”
I am glad you enjoyed it Phil. Welcome to the site.
Have a great day!
So does google penalyze you, If you are using paid traffic to boost your visitors to your web or blog?
I have never heard that, and I can’t think of a reason that Google would penalize those who pay them for targeted visitors. Buying traffic is simply another way to get it.
Have a great day Marcus.
Hi Mark,
It is a very nice and informative post.Thanks for sharing 7 steps to find profitable niche topics that helps in generating passive income.You well explained the post and it is helpful for many readers.
waterpearls´s last [type] ..CheapOair Coupons
I am glad you found it helpful. Have a great day!
Hi Mark . I (more or less) comprehend the steps apart the last one which is “generate some traffic.” Could you state briefly what are some easy traffic sources ? I always seem to struggle with traffic generation.
Luke´s last [type] ..What degree to get
Hi Luke,
Traffic generation is a subject that could (and does) fill many webpages, and mostly that is due to the constant search for ways to create good traffic.
At a high level, there are two ways to generate traffic to your website –
1. You could pay for it via Google adsense.
2. You could do search engine optimization (SEO) so that your pages will be ranked highly in Google, thus allowing for free traffic.
Both have advantages over the other, and both are rather large subjects.
I am working on a series that will answer many of these kinds of questions in the near future. Plus, I will be giving away some tools that I have been having some success with.
Have a great day!
Very good tips Mark, but I have a question: when you look for competition and also the traffic, what tools do you use ? I find google keyword tool very unreliable, it always show me different things..
Mike@Google Siphone Review´s last [type] ..Google Siphon Review
Hi Mike,
This is a great question. In my experience, the differences you are seeing are not a sign that something is wrong.
It may seem a bit odd, but it does make sense if you think about Google operating across different geographic areas, all of which are different in relationship to keyword popularity.
I use Market Samurai, which uses Google and a few other sources for their data sources.
So far, it has been doing very well for me. One thing to keep in mind is that keyword popularity changes constantly, as does competition. And, these differences can be quite large.
One link wheel, or even a single article could be the difference between a second and first page ranking on Google.
How that translates to other places is on important aspect of developing a strategy.
More to come on this in the future.
Have a great day!
Thanks for the reply Mark, it makes sense now! I guess I should get my hands on Market Samurai and maybe wordtracker.
Mike @ Google Siphone Review´s last [type] ..Google Siphon Scam