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This is the last of a three part series on “How to choose a profitable niche in 3 simple steps”. If you missed the first two parts of the series, you can get the first part here, and the second part here. If you never intended to make any money for your blog, you might still find some information here useful in the event that you’re selling your blog. The information here will help you gauge the market value of your blog.

Step1 – Analyze the Profit Potential of your Niche

For the rest of the folks whose intention is to make money from blogging, it’s important that you examine the possible income streams that your niche topic is capable of generating. In my previous post, I’ve talked about the many ways a blog can make money, but not every method of making money is compatible with every niche topic. For instance, contextual content Ads like Google Adsense and Kontera Context Link while works well with certain niche topics might do very poorly for other niche topics. Some niche topics work well with CPM (Click Per Mile) type Ads which is suitable for high traffic sites, while other niche topics do well with only certain affiliate programs. At this point, you don’t need to be concerned about what method of making money works best for your niche topic. Instead, you need to focus on potential profitability of your niche topic.

There is generally two camps here when comes to sizing up your niche earning potential – Advertising Networks (Adsense, Kontera, Bidvertizer etc) and Affiliate Programs.

Advertising Networks

We are just going to base our discussion on Adsense since it’s the market leader in this segment. In order to help you size up your niche topic earning potential, you need to familiarize yourself with two very easy to use tools – Google Adwords Traffic Estimator and Google’s Adwords Keyword Tool.

Merchants or Advertisers who have products and services to sell on the Web will buy keywords from the Google Adwords program. The “Average CPC (Cost per Click)” is the amount paid by the advertiser when the ad is being clicked on. These ads will show up on Publishers’ websites along with content related to the keywords. Publisher will get a slice of the ad revenue based on the CPC amount and also on how well Google rates your site content. This slice is generally around half the amount of the CPC assuming that Google considered your site to be good.

For the purpose of figuring out the profit potential of your niche topic you should go for something that has a pretty good search volume as indicated by the search volume bar and a CPC of between two to three dollars. If you are going for a niche that has the highest CPC in the marketplace, be prepared for a lot of competition from zillion of webmasters who are already established and competing for the keyword, and it may be a long while before you would get any kind of traction from your efforts at SEO and stuff.

The figure below shows how the different levels of CPC and how it played out for different niches. You would not want to target “Credit Card” because it’s highly competitive, but you might settle for “firm” or “plan”. Likewise, you might want to stay away from very specific niche like “paralysis” because of its low search volume and CPC. However, it might be a different story if you’re an authority site dedicated to paralysis, and have a strong passion for it.

Affiliate Programs

Some niches do phenomenally well with affiliate programs that carry a good variety of their product and services offerings. There are many affiliate programs on the web, some of the bigger ones are Amazon, Clickbank and CJ. Sign up for an account at CJ and check out the main category belonging to your niche and get an idea at the depth of the product and services offerings for your niche. Also look at their network earnings and 3-month EPC to get an idea how well their advertising campaign is performing.

There are of course other avenues you can explore when evaluating the income potential of your niche. Here are some unconventional ways you can get a rough idea on your niche income potential:

	Go to ClickBank and enter the category and sub category relating to your niche. If your niche is popular and people are making money off it by creating digital products like ebooks for it, you will no doubt see a long list. The list is sorted by gravity score in descending order. A high gravity score indicates that the product has been selling in the most recent period the score is taken. So what does this tells you, a high gravity and high payout indicates that the product is in high demand and popular among publishers. A quick Google search on the product’s keyword will confirm that.
	Go to 7 Search Keyword Suggestion Tool and type in your niche. You will get back a list of related searches based on your niche ordered by the search volume in descending order. The bid amounts that are displayed along with each keyword give you a good idea how much advertisers are willing to pay for the keywords. These bidding figures are taken across the advertising industry and are not specific to Adwords. The general rule of the thumb is to look for moderate volume and bid amounts of between two to three dollars.
	Go to Google and type in “PLR My Niche” where “My Niche” is substituted by your niche. PLR is Private Label Rights which is content that you can purchase and distribute on your own sites. If authors are writing PLR content on your niche you can bet that there’s pretty good demand for it out there and publishers are making money off it.
	Go to EzineArticles web site , a premium article directory, and drill down to the category related to your niche and look at the number of articles written for it. A good number of articles indicate that it’s a popular category. Also, looking at the most viewed section for the category and titles of the articles will give some pretty good ideas on the kind of subject matter within your niche that garner the most attention.

Can you think of anymore?

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