Selecting a Profitable Niche

 

5 Pillars to Successfully Selecting a Profitable Niche

by Domain Sam

You’ve looked around the internet, heard people talking about being an affiliate and thought to yourself that maybe that isn’t such a bad thing. Maybe you should look into it. Well maybe you didn’t think that but now it’s in your mind, this thing about affiliate marketing so let’s elaborate just a little about it. The selecting a profitable niche is the hardest part.

Choosing a niche market to promote products in can be a tough thing to do for affiliate marketers, especially if you are just getting started. But it really doesn’t have to be that way. In most cases there is always an easier way. Same is true for anyone trying to decide on a niche market, and what sort of products to promote.

A common problem that occurs is  affiliates think that smaller markets are easier to make money in because of less competition, but often the sales activity is too low. The larger markets have much more selling activity going on, but it is usually much harder to break onto. That’s due to the stiff competition you’ll face way before you make any real money.

 

Using Pay Per Click (PPC) Ads

Even though bigger markets are harder to work in, if you use PPC (Pay Per Click) advertising and a proven way to convert your paid visitors into cash, that’s all you need to compete with the big players in any market. Just think about that for a minute. Right off the bat you’ll be light years ahead of those who are taking the long road to profits by depending on free traffic.

Sure, your costs may be higher when using PPC advertising if there’s lots of competition but the truth is that if you pick your keywords properly and you set up your campaigns in the right way, you’ve got the same formula that the marketing gurus use to rake in big paydays every month. If you think I am making this up here is a reconstruction of a conversation I had with someone who handles the PPC costs for a small company in Southern California. He writes the checks to pay for them.

Here is a short summary of our conversation:

Charles: I tried PPC advertising some years ago, but didn’t like the idea of paying for traffic and I also didn’t have much luck with it. Ray: You probably didn’t do enough  or maybe you didn’t do any keyword research. Charles: I did a little. Ray: Our company does all their online business using PPC advertising. We don’t even have any merchandise. Charles: What? Do you sell physical or downloadable products? Ray: We sell physical products. They are drop shipped direct to the customer. Charles: What kind of ads do you use? And do you spend much money on ads? Ray: We use Google AdWords. Actually we have a company that specializes in that and they create our ads and run them for us. Charles: Wow! That sounds awfully inefficient to me. Do you make money from the ads? Ray: Yes, for sure. I’ll tell you, we spend between $25,000 and $35,000 every month on AdSense ads. Charles: But the company you work for is a small company. How can they afford that? Ray: The ads essentially pay for themselves plus make us a nice profit. We run the ads, people order and we collect the money. The products go directly to them and we don’t touch anything, except the cash we put in the bank. Charles: I’m shocked! Spending that much on ads, yet making many times more profit than what you spend on ads. I will have to do some serious thinking how I can use my AdWords account to make me even a small percent of the profits you guys do.

 

PPC Ads can be Profitable

That was the gist of a conversation we had right before Christmas last year (2012). Although they were spending big money on PPC ads, it shows it is possible to make big bucks off of these little ads. The niche they were in was a specialized niche and not very big, yet it offered big money returns. I might also mention that the online business was something totally separate from their brick and mortar business which was a retail store, and it had nothing to do with anything they sold in the store.

OK, that doesn’t prove the little guy or a beginning niche affiliate marketer can make big bucks with PPC ads, but it proved to me that if one does things right, that money can be made with those little ads. It will almost certainly take some trial and error, and with that some wasted money trying to find out which ads work and which are the most effective. But once you get it right the sky could be the limit if the market is big.

 

Free Traffic Methods

One can also choose free marketing methods for their niche marketing. These are methods such as article marketing and blogging. There are many other methods of free traffic too, such as social marketing and dozens of others. But although they may be free, you don’t necessarily get a free ride. You can bet your bottom dollar it will be just as hard to stand out and get the results you deserve for your hard work. Especially if you don’t do detailed keyword research if writing articles or don’t know what you are doing.

Even though many people will say you should avoid this hassle by targeting small niches like bubble gum wrapper collecting , book cover collage art, TV remote control collecting, the truth is that you’ll find it hard to bring in enough traffic in a lot of these “off the wall” niches with little interest in them. You won’t  get life changing results in terms of sales volume or profit. But to possibly get around that you could work on multiple small niches to make up the volume. If you are very adventurous, you could just immerse yourself into the bigger markets where there is enough demand to go round for all marketers.

 

5 Points toward selecting a profitable niche

Whichever route you decide to go, here are a few pointers to make sure you pick a niche where there are lots of people involved, but also one where  you can make easy sales and tap into multiple ways of reaching the market:

1. Look for niches where the audience is likely to buy multiple products.

Think hobbies, sports and consumables that require regular refills or upgrades. When I was making the swap meet and garage sales circuit some time ago I noticed that consumables sold extremely well at one particular swap meet in Rosemead California.

Each week I went there I noticed an older man pull up in a large stake bed truck loaded with toilet paper. That’s a real consumable! Usually within a couple of hours he was sold out and left. This was in the 70s when things were cheaper. He would bag huge bulk rolls of toilet paper in large plastic bags and sell 18 big rolls of toilet paper for $1.00. That was a real bargain and the quality was very good.

At that same swap meet there was another guy selling those small sample bottles of lotions, all different kinds, small bars of soap, and other toiletries. The exact same complementary items you find in hotels, usually in the bathroom, that are there for your use. Although they were samples, not to be sold, he was raking in lots of money from them, and appeared most of the times I went there. Consumables are great sellers.

 

2. Consider how the market thinks, what is their mindset?

In other words, are they desperate for a solution or passionate about their interest? This is the best kind of market to sell to. For example, someone who likes to stay in shape is more likely to subscribe to your diet tips newsletter or buy a new diet fad recipe than a person who likes to solve difficult Sudoku puzzles as a weekend hobby.

 

3. Think of the demographics of the market.

Is the market younger or older, male or female? Teenagers will not have as much money as thirty something married couples. But wait, that’s not necessarily true. Many teenagers have way more money to spend, especially on frivolous things, than their parents. Young kids seem to be able to get their parents to buy then more than what the family can afford. Older people might be more reserved about buying products online or not many of them even use a computer. It’s important to know what kind of market you are dealing with.

 

4. Are there a lot of ads showing for the market you are trying to reach?

This is an easy one. Do a Google search, or/and Bing or Yahoo search for your market keywords. If there are a lot of ads it’s a good sign. If there are few ads then you might have to dig deeper, depending on the type of market. If there are no ads, this is a big red flag. It is best to stay out of that market because it is likely unprofitable to advertise to it. If you do venture into it, this is what can happen.

 

5. Are these people active online?

If no-one is searching for the types of things you are selling, you’ve got your work cut out for you. Also, you need to know if your market might read articles, get involved in online forums and participate in other social groups and networks.

 

A Profitable Offline Niche Example

Above in point one I mentioned swap meets. They are still alive and well although I don’t attend any anymore, but I know people who do. Anyway I am not sure if this method I will mention still works, but if people are any indication, it will still work.

This was back in the 70s, but I feel sure the same thing will work today to some extent. Back then my girlfriend used to go to garage sales and swap meets. She made the rounds on a fairly regular basis looking for old things, antiques, and unusual things. I went with her on her rounds and got to know what people wanted and what was essentially trash, as far as what would sell, although I was wrong at times.

Basically what she would do was buy those things at swap meets and garage sales for low or cheap prices. She would always try to get the lowest prices if she could, which was not always possible. Some things she would clean up, sometimes polish, others no, she would leave them dirty, or rusty, or whatever condition they were already in.

Then on Sundays, once a month she would take her collection for the month to the Rose Bowl swap meet. Back then once every month on a Sunday, I believe, they had an antique swap meet. Prices at that Rose Bowl Swap Meet were almost always higher than other swap meets.

Sometimes she would make a $1000 in just a few hours selling the stuff she had collected during the month. Other times, a little less, while one time I was there with her she made over $3000 that day. As an example of some of the things she found and resold: A very small Tiffany lamp for over $200. An old 3-signal stop light that I had to put some special bulbs in for $350 – cost was $10.  She had picked up some old tarnished silver soap dishes for $0.50 each. She didn’t even shine them up and sold them for $50 apiece. She had a box of old crystal-like doorknobs like a lot of old houses used to have that she took away for a dollar. She sold them individually for $25 each and on and on. Apparently what was garbage or no good for one person was a treasure for another.
 

Other Profitable Offline Niche Examples

That’s not an isolated story either, for my parents once had a small used thrift store in Alhambra. They would go to the Open Sky Drive-in in Arcadia or Monrovia (it was right on the border of those two cities) California and sell some of the things that didn’t sell at their store. They did pretty well (but not as well as my girlfriend) and did that for almost ten years.

Don’t think that just because that was a long time ago that such techniques won’t work now. Maybe not as well or it may be somewhat more difficult, or maybe in a different form, but definitely the idea will work nowadays.

Another example – I met a young student going to a university to be a doctor. He also liked bicycling and that was how I met him. He rode his bike up to my sister’s booth at the Claremont Antique Art fair they have every year. We talked for a long time. What he did for extra money was find people selling bikes on Craig’s List, buy one, then turn right around and sell it , often right back on Craig’s List. In the process he would make several hundred dollars profit. He specialized in Mountain and racing bikes. As you know they cost a lot of money. It’s the age old thing of buying low and selling high. The exact same thing stores do. Nothing new there, except that he made a nice profit doing it.

One last short example. I did this in the mid and late 80s. It is still possible today, but the laws have changed, prices have escalated to ridiculous heights, and it’s much harder to find such deals, although it can be done. I will just say here that I bought property in Southern California for “no money down” and resold it, putting a new mortgage on it where I collect the money.

There is more to it than that one sentence, but the idea is the same, but with a twist. Buy low, sell for the same price or a little higher, but make the interest on the mortgage a little higher, and then collect the difference as cash every month and/or some money up front, the rest if the house is sold or refinanced. That’s a mouthful, but you can read about it over on my travel blog, Travellistics.com.

 

Active Markets are the Best

Active markets are some of the best kinds of markets. It’s important because activity suggests that the market is enthusiastic and responsive to what’s happening in their particular area of interest. This is good for you and makes it easier to withdraw profits from the market.

If you use these 5 pillars for selecting a profitable niche you will save a lot of time, money, and frustration and it will help you get off to a great start with a hot, ready to buy market. If you have success with these ideas please leave a comment and tell us about it.

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