Finding Out How Profitable Your Niche Is
An important part of selecting a niche is checking the market to see how profitable the niche will be. Selecting a niche that is not profitable wastes time and money. The goal of affiliate marketing is receive maximum returns on minimum efforts.
There are two key factors that you will use to measure a niche’s projected profitability. The first is the amount of traffic the niche gets through search engines. The second is the visitors value, which is the potential revenue for each visitor. These 2 items will tell you the quantity and the quality of potential customers in that market.
Importance of Traffic
The amount of traffic is an important metric because the more people are searching for your product, the bigger the market is and the bigger the market is, the more potential customers you will have.
Using traffic as your only metric would be misleading, because there are some niches that get a lot of searches, but do not have any revenue attached to them. For example, jokes, celebrity names, and quotes have little or no revenue stream. Most people searching for these terms are usually looking for free content and are not looking to purchase any items. A profitable niche will have buyers actively searching for it’s products.
Calculating Traffic
To find out how many people are searching for keywords in your niche, use Google’s Keyword Tool .
For this example we will check the traffic for camping gear. Enter your keywords into the text area, fill out the captcha, and then click get keyword ideas.
Sort the results by Local Search if you are planning on targeting your local market or sort the result by Global Monthly Search Volume if you are planning on targeting the world market.
The results tell me that for the previous month, camping gear was searched 1,000,000 times. That is a lot of buyers searching for camping gear. This could be an interesting niche.
Importance of Visitor Values
Visitor values are an important metric, because the income comes from the sale of products and clicks on ads. Unless the visitors are actually motivated to purchase, they have no value.
Using visitor value as your only metric would be misleading. There are some niches that would have really high payouts, but there are not enough buyers. For example, yacht rentals and jet rentals are high cost items, but they have very little search traffic. These high end products usually have a smaller market because of their high cost. Not everyone can afford to rent a yacht or jet.
Calculating Visitor Values
To find out the visitor value we would go back to Google’s Keyword Tool and use our existing search. Click on the drop down arrow under Choose columns to display and select Show Estimated Avg. CPC
Now we know that advertisers are willing to pay $1.64 on a minimum for each click.
Calculating Market Value
Calculating the market value is very easy. Take the Search Volume and multiply the Estimated Avg CPC. For camping gear we would take $1.64 and multiple it by 1,000,000. Our monthly market value for July is $1,640,000. To calculate our yearly value, we would just multiply our monthly value by 12. So the yearly value on camping gear is $19,680,000. Based on these calculations, camping gear looks like a very profitable niche.
Putting It All Together
Now that you know how to calculate market value, learn how to use it properly. Think of a few niches that you are interested in. Calculate each niches market value. Choose the niche with the highest market value and get started. Remember the whole point of affiliate marketing is to receive maximum revenue with minimum effort. Do the research and don’t waste time with unprofitable niches.
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