How To Find A Niche
I received this in the mail today. A promotional piece from Duncan Carver, which is also a pretty handy tutorial on finding profitable niches.
The email is reproduced in full:
Duncan Carver’s – “Online Marketing Today”
Friday 23rd February 2006
http://www.onlinemarketingtoday.com
Hi Brian,
Ok, so if you read my email on Tuesday you’ll recall the
market I’ve selected to tackle for our nothing held back
“idea to profitable online business” project is “worm
farming”. I received quite a few emails from readers
thinking this was quite an odd ball market to enter, but
there is logic behind Duncan’s madness (sometimes).
Firstly what is worm farming?
Worming farming is the “complete process” behind breeding
worms, either as a hobby for the individual gardener, or as
a business on a commercial scale.
Worms produce two types of fertilizer, the castings that
collect on top of the soil of a worm farm, and a liquid
fertilizer that is collected below the farm as moisture
passes through the soil. Both of these forms make excellent
natural fertilizer for your garden.
In addition, worm farming is an excellent alternative to
standard compositing, allowing a house hold to eliminate
food and paper waste (and generally any other waste they
would throw into the compost bin). It is promoted by many
regional and local councils as such.
Do I have any personal interest in worm farming?
No, not really.
I have always had an interest in ecology and actually did an
environmental studies degree at university back in ’98, but
that is the extent of it. I also live in an apartment with
the only outdoor area being a 2 x 3 meter deck so have
little room to begin a garden, let alone a worm farm. Heck,
who knows, I might just start one during this project to get
my hands really dirty in the market.
The reason I have selected the market is a result of the
processes I use to analyze how competitive particular
markets are online, and because of the type of business I
wish to set up. I want to be able to deliver a digital
product so I do not have to deal with product inventory and
fulfillment. It will also enable business automation as much
as possible with automatic ordering and product delivery.
In that respect the product I wish to deliver to the market
I decide to proceed in will be an information product. More
than likely this will be a “How To…” guide, with suitable
bonuses to help add further value.
In addition, depending on the lack of a “central community”
around the market, and the potential to add further value to
the offer, it might be possible to extend that into a
monthly or annual paid membership website.
Ideally I would prefer this option as it would create
recurring income. Aside from the obvious benefits of that,
it would add even greater value when I decide to sell the
online business.
Again, as I said, this is an “as I go from step one”
project, so I’ve yet to actually decide on the form of
product aside from it being digital information. All I have
decided on is that I will employ a ghostwriter to create it
for me (something which I know you’ll be interested in
learning the processes behind as this project moves
forward).
I should mention that in the interest of this project being
completed within 6 to 8 weeks (to the point of hopefully
making sales that is), last week I employed a ghost writer.
We have yet to do anything substantial other than discuss
the project itself.
As I write this, he is busy creating a potential structure
(a draft outline of the “how to” manual which we will then
move forward with). I will talk more about this whole
process in the near future. I just don’t want to mislead you
with any unrealistic time frames if you think this product
development thing appeared to happen overnight when it’s
introduced to the website in the near future.
Right. Onwards.
So the market selection process I use is as follows…
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1) Create a list of ideas for potential niche markets.
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This is a brain storming list of potential ideas that I
could produce an information product around. Things people
want to know more about. Things people want or need help
with. On this list of ideas I had such potential niche
markets as bee keeping, worm farming (obviously) and
others.
I’m not going to go into them all as it’s not necessary. As
to how I thought about them, ideas usually pop into my head
when I’m walking down the beach or whatever. I actually
recall my uncle was interested in worm farming years ago and
I’m pretty sure that’s how that idea popped on the “to
research” list.
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2) Investigate The Demand
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Once I have my list of ideas I then need to figure out if
people are actually searching for information related to
those niche markets.
The first point of call I have for this is called “Keyword
Domination“…
To keep this short it’s a membership website that contains a
database of over 20 Billion keyword terms updated every
month. It’s as easy as hell to use, and as you might imagine
with that number of keyword terms in it’s database, it
provides you with very in-depth keyword reports.
You plug your target keyword term into the application, in
this case ‘worm farming’, and it will take a few minutes to
search the database. When complete an email is sent to you
and you then login to download your keyword list as comma
delimited text file (which you can then open in any
spreadsheet program to analyze).
In addition to all keyword terms containing your initial
entry phase, it also provides monthly search volumes and
estimated clicks (assuming you make it to the top positions
on the search engines for those terms).
Here are the top five results it returned for the terms
‘worm farm’ and ‘worm farming’ (including search volume and
estimated clicks)…
worm farm 7454 5174
worm farm at home 219 152
earth worm farm 106 74
instructions for building worm farm 68 47
smiths worm farm 61 42
worm farming 6479 4497
commercial worm farming 769 534
earth worm farming 736 511
worm farming business 601 417
worm farming profits 530 368
…worm farm returned a total of 211 individual keyword terms,
worm farming returned 87. A quick interesting observation
about the above… more people search for worm farm in
comparison to worm farming, and more people search for earth
worm farming rather than earth worm farm. That was a mental
note for when it comes time to target keywords for search
engine optimization.
Ok so we can divide the figures there by 30 to give a rough
indication of the volume of visitors we might receive on a
daily basis if I can achieve a top ranking for the term
“worm farm”. That’s 248 searches per day (with 172 estimated
clicks as a result) from the English speaking (or rather
searching) world. Not the largest market but there is demand
none the less.
If I could achieve 172 unique visitors per day, create a
sales process with a conversion ratio of 1%, that would
equate to 1.72 sales per day. That’s 51.6 sales per month.
With a $97 price point (just crunching numbers here), that
would be $5,005 per month gross income. Not too bad.
Obviously the above is basic estimating and is by no means a
limitation (nor a guarantee we will see such results). I
have simply used the most targeted keyword phrase here as
these are the most targeted potential customers. They are
actively seeking information on worm farming on the major
search engines.
In addition to this, worm farming has a wider appeal to the
“gardening” market, containing people who are looking for
ways to increase their crop yield and / or remain organic
gardeners and so on. So the potential market interested in
worm farming is considerably much larger. At some point in
this project we will begin marketing to this wider audience
which should be fun.
Why do I use Keyword Domination?
I find it the most thorough tool in terms of depth of
keywords returned, it’s dead simple to use and it’s fast.
Plug in all your keyword terms, let it do its thing for an
hour or so (if you’re researching a lot of terms at once),
then come back to download your lists and analyze them. It
also gives highly accurate search volume estimates.
I’m not going to go into alternatives you might want to use.
There are plenty out there so you can use what you like, but
this is what I use and recommend because it’s fast and in
depth…
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3) Investigate The Search Engines
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Now we know there is demand.
The next thing I’ll do is begin a thorough search on the
major search engines. Google, Yahoo, and MSN with the
majority of my focus on Google. Here I am looking for
several things.
I’m looking for competition in terms of the volume of
existing sites about “worm farming” and how well they have
been optimized for the search engines. Google returns
900,000 results for the search phrase worm farming…
http://www.google.com/search?hl=en&q=worm+farming
…however this shows all sites that include the terms ‘worm’
and ‘farming’ in no particular order. That is they mention
both terms somewhere on their website page, but not
necessarily next to each other. So we make an exact search
on the term by placing quotes around worm farming and we see
there are roughly 91,500 websites that mention the exact
term…
http://www.google.com/search?hl=en&q=%22worm+farming%22
Not much competition at all in the big scheme of things. To
give you some perspective, “bee keeping” returns 455,000
results, and “weight loss” returns a whooping 43 million
results.
That bee keeping one is interesting.
In a side by side comparison of the Keyword Domination
results for both ‘bee keeping’ and ‘worm farming’, they are
extremely similar in terms of volume of monthly searches
being conducted.
There are 7,183 monthly searches for ‘bee keeping’.
There are 7,545 monthly searches conducted for ‘worm farm’.
The important thing to note here is that in order to receive
any decent exposure in the search engines for the bee
keeping market, you would be competing with almost five
times the volume of websites to return the same volumes of
traffic.
That of course doesn’t mean it’s impossible, simply more
“search engine competitive” and it will take more time and
investment in order to achieve decent ranking results.
In addition to basic analyses like this, I am looking to see
how well websites are optimized to rank well in the search
engines. What is making the top 10 websites here rank well
for the term worm farming? How easy is it to replicate that?
How easy is it to better that, to ensure I can achieve a top
10 ranking?
So I will analyze the top 10-20 websites that show up for
the term worm farming.
Without going into the onsite website optimization factors,
I’ll explain a quick technique I use to see how aggressively
the sites have been optimized specifically for the search
engines.
(I’ll discuss the onsite website optimization factors in a
future letter as I actually build…
http://www.wormfarmingsecrets.com
…so you can see every onsite search engine marketing
element I do there).
I’m going to take a look at the Google Page Rank (PR) value
of each of the top 20 websites and their incoming link
popularity.
The idea here is to find an average value for both factors
here. This will give me an indication as to what type of
Page Rank value I need to achieve, and the respective number
of incoming links I will need to build, in order to compete
with the existing top 20 websites. If you don’t know what
Google Page Rank is, there is a good explanation of it
here…
http://www.iprcom.com/papers/pagerank/
…but to try and sum it up as simply as possible… it’s the
way Google ranks websites on a scale of 0-10. The greater
the numeric value, the greater the popularity the website
has in the eyes of Google. It is directly related to the
number of incoming links a website has (link popularity),
the quality of those links (from related websites), and the
value of those links (the PR value of the pages the links
are on).
There is much debate over whether Google PR still plays a
vital role in search engine optimization. I’m telling you
right here today that it does, and I’ll explain specifically
why when we initiate the link building campaign for our worm
farming project. Right now though we’re simply focusing on
link popularity.
Although this process can be done manually, I use a tool
called PR Prowler to pretty much automate the entire
process…
http://www.marketerschoice.com/app/?Clk=1836753
When you’re going through this whole niche market analyses
for 20 or more potential niche markets to find the winner,
it can take a heck of a lot of time if you do it manually.
Automating the data collection process can reduce weeks into
days so you simply need to focus on the results.
With PR Prowler you enter your desired keyword term, in our
case “worm farming” (using quotes to make an exact
search). You then specify the number of results to collect
and the minimum Page Rank value you want to find.
I select 20 results to take an average of the existing top
20 websites and set minimum PR value to 0 as we want to
analyze all sites in the top 20 results.
You then hit ‘Prowl Keywords’ and the application will go
out and pull in the top 20 results in Google for your
keyword term. In minutes it gives you…
a) The Page Rank value of each of those websites.
b) The number of outbound links each page has. This is the
number of links pointing to other websites and / or other
pages within the existing website.
c) The number of incoming links the website has from other
websites (this is considered its link popularity). You can
collect this data for both Google & MSN and I recommend
doing both as MSN tends to show more back links than Google
so it gives a better overall indication of what might be
required for your link building efforts.
…you can then export this information to a comma delimited
file to open in a spreadsheet and analyze. I’m not going to
show you all of the results it returned here as this letter
is getting rather long. However here are the results of the
analysis which was completed in about 2 seconds using the
“auto average” feature in MS Excel…
Top 20 results for the term “Worm Farming”:
Average Page Rank: 3 (Max was 5)
Average Outbound Links: 39.65 (Max was 142)
Average Incoming Links Google: 9.25 (Max was 147)
Average Incoming Links MSN: 21.15 (Max was 216)
So what does this tell me?
If I want to stand a chance of ranking well for the term
‘worm farming’ in Google, I will need to build approximately
22 incoming links (again use the MSN value as it is more
accurate), obtain a PR value of around 3 (although not
essential to the actual rankings of your site, it’s only
going to strengthen them), and if I wanted to, I could link
out to as many as 39.65 different pages (either other
websites or internal pages) without too much detriment to
rankings we achieve.
Of course these are averages and we don’t want to be an
average website floating around somewhere in the top 20
results. We want to be in the top 3 and preferably number
one. In that respect we take the maximum values as a target
for our own link building campaign.
So we want to aim for around a PR value of 5, gain around
250 odd incoming links, and link out to as few external
websites and internal pages as possible from our home page
(to retain our PR values and ensure we do not impact on our
ranking potential initially).
Again this is not set in stone. If you achieved exactly the
above goals it doesn’t necessarily mean you’re going to
shoot to number one for your desired term (there are many
other SEO considerations still).
However what this does is give us another important aspect
of comparison to use when comparing possible niche markets
to tackle in side-by-side comparisons. Again, I’m not going
to include the data “bee keeping” returned here but it is
considerably much higher in terms of both averages and
maximum values.
Also just because the above are the maximums, it doesn’t
mean that once we have achieved them for project we will be
stopping there. Nothing will help to strengthen and retain
your top search engine positions more than continually
increasing the number of incoming links to your website from
external websites.
Moving on.
I then take a good look at the top websites (I’ll browse
anywhere from the top 50-100 sites) to see what each website
is actually about. Are they selling products or providing
information? How many websites are selling similar or
complimentary products? Will they be direct competitors or
potential affiliates?
Basically I’m trying to get a feel for the market place.
It is hard to describe how to compare markets when doing
this, but after doing this for each niche market you’re
researching, you’ll hit a couple that just feel better than
the others.
When doing this for worm farming I discovered a few
interesting things.
Most of the sites were informational.
In fact a lot provided very brief ‘how to setup a worm farm’
guides. A proportion of these were local council sites, and
others independent sites. I don’t consider these to be
competitors, the ‘how to’ guide we will create will be much
more in-depth and provide better overall value. These sites
could make excellent affiliates (but it would be a struggle
if not close to impossible to get government and local
council bodies as affiliates).
Many of the sites offered complimentary products.
That is they were actually selling worm farming equipment
and worms. These sites could make excellent cross
promotional partners. In addition, it raises the possibly of
sourcing some of these products (likely through a drop
shipper) in the future and offering a packaged bundle on the…
http://www.wormfarmingsecrets.com
…website.
Another mental note.
I found a few discussion forums related to ‘worm farming’
(recall I am also looking to see if a community exists and
if there is a need for one). These were not popular and were
difficult to spot on the two sites I found them on. So there
seemed to be places available for discussion but people
simply didn’t know about them, or if they did, were not
impressed enough to use them.
In terms of discussion forums, this almost always due to
lack of current activity.
I was surprised that out of all of the sites I looked at, I
only found two direct competitors selling information
products related to worm farming. One site sold a
downloadable book for $47, the other sold a number of
manuals and DVD’s which were shipped as hard products or
offered as digital downloads.
That told me there are people serving the market, but the
extent to which they were buried deep down within the search
engine results (and their apparent lack of setting up an
effective direct selling marketing funnel and sales letter)
left little for concern.
I actually saw the DVD website as a potential strategic
partner in the future where I could possibly obtain the
rights to the products, in order to bundle them with the
product we are creating, or establish some sort of revenue
sharing arrangement.
In addition to checking the actual existing websites, it
pays to conduct related searches on popular affiliate
networks such as cj.com, clickbank.com, shareasale.com etc
to see what else is being offered in the niche market. That
process is pretty self explanatory so I will not expand on
that. It’s basic searching.
After reviewing all of the niche markets I was investigating
like this, the worm farming market gave me the best feel, in
fact I felt it was wide open for me to step into and deliver
up the best worm farming source of information (and
potential community) online.
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4) Paid Advertising Market
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In addition to the above methods, one further thing I
will do for each niche market is check to see what the
competition is like on the Pay Per Click search engines. (I
recommend looking at both the Google Adwords program and
Yahoo’s Overture.com program).
This will provide me with more important pieces of
information to reinforce what has already been collected. It
will show what competition is like in terms of paid
advertising in the market, how much advertisers are paying
and what sort of traffic they are receiving.
Even if you have no plans on using pay per click search
engines it is worth while opening an Adwords account for
such market research purposes…
http://adwords.google.com/select/Login
I will then use their “Traffic Estimator” tool which you
will have available in your account under the tools
section.
This tool will estimate average cost per click, estimated ad
position, estimated clicks per day, and your estimated total
cost per day to run your campaign. In order to get this
information you need to plug in a keyword list, so I simply
use the keyword list that we created with Keyword
Domination.
This showed some interesting things.
It showed there were very few clicks on ads related to worm
farming. Only 6 keywords returned any traffic estimates and
they would provide a total of only 5-7 clicks per day. The
average cost per click overall for these terms would be
between $2.71 – $3.22 per click, with a total cost per day
of between $20 – $30.
This was not very encouraging in terms of setting up a
highly profitable paid advertising campaign for the most
targeted keyword terms in the market.
However looking at the actual ads themselves (simply
searching on Google and looking at the ads that appear down
the right hand side), it showed the majority of advertisers
had nothing to do with worm farming and were simply search
engine sites (arbitration sites).
That looked more promising as it would allow me, if I chose
to do so, to place a much more targeted ad that actually
sends the user to proper worm farming information. So there
would be room to wriggle in there with those and other
keyword terms related to the wider audience if I chose to do
so.
However I really only use this as another market research
method (and have no foreseeable intention to setup a Pay Per
Click campaign for this project – although may decide to do
so in the future).
I tend to stay away from Pay Per Click campaigns due to
their cost (not that you can’t make amazing returns on your
investment). However I have techniques I use to generate
what equates to highly targeted paid traffic in very
competitive industries for less than $0.01 per visitor. Yes,
I will share that technique with you in this worm farming
project in the near future.
To help automate this part of the market research process
even further, I use a tool called AdWords Analyzer…
http://nesterltd.digital247.hop.clickbank.net
…this tool will allow you to enter a search term and it will
then find keywords related to the term (using the
overture.com search query tool). It will then show you the
number of ads on both Google and Overture for those terms
and if you attach the application to your AdWords account,
will login and pull in the estimated cost per click
information for you. Again, this makes life much easier.
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Niche Market Selection Summary
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So that’s basically it. When going through the above motions
for each of your potential niche markets, laying all of your
data out on the office floor and comparing what you’ve
found, you’ll eventually discover which market has the best
“feeling” to it.
In addition, it allows you to look at each market and decide
whether or not you wish to invest the time, energy and money
into succeeding in that market.
If you find several that look extremely promising, but one
obviously has less competition in the search engines, has
less paid advertising competition, has less competing
products, but a considerable demand is there, then you might
decide to pursue that market initially.
It will be much easier to succeed in, rather than jumping
head first into something ridiculously competitive such as
the weight loss market.
So to recap…
- List of ideas & potential niche markets.
- Run keyword analyses tool to discover demand.
- Search on Google, MSN, Yahoo looking for competition in
terms of volumes of sites and how well they have been
optimized for the search engines.
- Analyze the off site factors that make the top sites in
your market rank well (PR values, incoming links etc) for
point of comparison and rough targets.
- Look for competition in terms of businesses selling
similar or directly competing products, which in turn
reveals potential affiliates, link partners, joint venture
partners and other potential opportunities.
- Check Adwords and Overture.com to discover what the paid
advertising sector is like in the industry you’re
investigating.
- Rinse and repeat for each potential market then compare.
Tools I use and recommend:
I guess I should also stress that it is important to do your
initial research thoroughly.
Research and compare at least 20+ different niche markets you
might be interested in. Do not just jump straight in and
attack the first market you’ve researched. It might not be
the best market for you. As I mentioned I have no immediate
interest in worm farming and I had no idea this would be the
market I would target for this new project. It simply felt
right and more easily achievable in comparison to some of
the others I researched.
So what’s next for the project?
Over the next few weeks I plan on setting up a basic website
optimized for the search engines on the
wormfarmingsecrets.com domain, and start a link building
campaign to the site to help with search engine
rankings. The basic website will be a lead capture form in
the premises of a worm farming newsletter in order to
capture leads from all traffic arriving (and some valuable
market research data).
In addition I will begin marketing the site using various
other techniques to continually drive more traffic to the
site and generate more leads, so when it comes time to
introduce the product, there is already a potential customer
list to market to. And meanwhile in the background I will
be developing the product to sell (well, I’ll be supervising
the Ghostwriter) and recording the process to share with you
in the future.
I don’t plan for each letter to be this long, nor will they
arrive immediately after I do something. I will try to keep
them as detailed but as brief as possible, and only send one
per week unless I find it important to send additional
project updates.
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Project Progress & Interesting Findings
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Ever wondered if Google finds a new website as a result of
people searching the internet using the Google toolbar?
The answer is… yes. I announced the domain (which hadn’t
even resolved at the time) to readers of this newsletter not
24 hours ago. There is still no place holder page there.
I haven’t done anything else. We’ve already had over 700
unique visitors to the domain (readers to this newsletter as
there is no other way anyone would know about it), and
Google has already hit the site five times with the last
visit being on 20 Feb 2007 – 14:08.
The only way Google could know about this is via people
visiting the domain with their Toolbar installed. Is this
significant? Not really but interesting none the less.
Personally I don’t find this significant because due to the
link building strategies I’ll employ on this site, there is
no way Google wouldn’t find the site. More importantly it is
link building that will help the site become thoroughly
indexed and receive good rankings, not a visit from Googlebot
alone.
That’s all for this letter.
Please feel free to jump over to our forums…
http://www.onlinemarketingtoday.com/forums/
Best…
Duncan Carver
mailto:admin@onlinemarketingtoday.com
http://www.onlinemarketingtoday.com
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