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Niche Market size.
How big of a niche do you need to make a profit?
karim0028




msg:3167643
 4:36 am on Nov 25, 2006 (gmt 0)

Good Afternoon Ladies and Gents,

Ive got a quesiton i have been trying to figure out... Everyone says niche and ye shall prosper. My question is how niche is too niche? When doing your keyword analysis and stuff like that (prep work) How much search traffic do you like to see for a niche keyword before you would consider starting a business or affilate around it?

Obviously niche by definition means small; otherwise you would always have boatloads of competition. So how big does your niche have to be for it to be worthwhile?

Would love to hear your thoughts.

Thanks

 

steve




msg:3167758
 11:16 am on Nov 25, 2006 (gmt 0)

Depends on how much profit selling one widget makes you!

I'll take $1m profit on one sale anyday!

jecasc




msg:3167785
 1:21 pm on Nov 25, 2006 (gmt 0)

Yes, Steves right. If one sale makes you a profit of lets say 100.000 $ perhaps one sale a year is enough. So if you have a conversion rate of only 0,01% you need 10000 visitors a year. (However as it goes with statistics you might as well sell nothing to the first 10.000 visitors and then make two sales within the second 10.000 visitors.)

If one sale only makes you 100$ things look different.

So to determine if a niche is worth it you have to take into account all your fixed and variable costs and then calculate how much you have to sell to be profitable.

Then you have to make a good guess about what your conversion rate will be. So lets say you need two sales/day to be profitable and you believe that of 100 visitors one will actually buy you will need about 200 visitors a day.

Lovejoy




msg:3167824
 2:31 pm on Nov 25, 2006 (gmt 0)

In my case I sell information, ebooks, tutorials etc... and I find that any niche keyword search under about 3500 times a month is not worth creating a product for. In my particular niche products over $10.00 are a hard sell, so I have to sell quite a few to make it worth my while.

Lovejoy-Out

karim0028




msg:3168527
 4:12 pm on Nov 26, 2006 (gmt 0)

Ok, ive done some more reasearch and the area that i am looking at does have some sites already devoted to what i am planning on selling.... Now obviously on the net there are not many (if any) niches that dont have several retailers in them... They are small shops as far as i can tell....

The market is not flooded with SEO'd sites and the like. I cant even find any google Ads on the search term(s). Now, of course the first thing i asked myself was am i just making myself believe there is an opp there when in reality its already been exploited... I also asked myself why there were non google ads? Is it bc the market is not very profitable

To be frank, there are competitors there, just not very competitive YET. I so far count around 5-6 competitors in the search term (s) that i looked at. The products sell between the 50-$80 range so there should be a decent profit margin if you find the right source (hell if you sell one product aday that could be $30 bucks). I could even go in with ads and the works and use that to gain a customer base...

Is there anything that i am missing when scoping this market out? Better yet, what else should i be looking at?

And the eternally nagging, second guessing question why havent many other people flooded this market? Why are there no ads?

Thanks

karim0028




msg:3168529
 4:20 pm on Nov 26, 2006 (gmt 0)

BTW, i am still trying to find a source now to be able to understand the wholesale value and markup in this market. I will bring more of those price details later....

How many of you guys started in a market with the amount of competition as i described above and were able to make a living at it (or profit)? And if you did what strategies did you employ to gain market share or customers?

Thanks

Lovejoy




msg:3168586
 5:36 pm on Nov 26, 2006 (gmt 0)

Depends on your product, I just tried to put myself in the customer's shoes. In the case of books and information, check search terms for similar products for these niche categories and make finding them on your site no more than one click deep by making your menu very specific.
Even if your product isn't the cheapest, people will buy it if your description of the product is clear on your site and easy to find by SEO keywords.

Lovejoy-out

pbradish




msg:3171070
 8:43 pm on Nov 28, 2006 (gmt 0)

Karim, I was in the same boat in a sense. There were maybe 20 competitors but in all honestly only half of those were any threat. In ecom, I've noticed businesses starting up and shutting down on a monthly basis.

To make a long story short, my business has in operation for five months, and taking sales online for four months - and it turned into a full time gig very quickly thanks to SEO, PPC, and niche message forums. I make just about what I had made in my previous job now but am about a thousand times happier, and you cannot put a price on that.

Just be sure that when you go live, you are honestly ready for it. Also, make sure that you have some sort of mailing list and keep in touch with customers periodically. It's a heck of a lot easier to keep old customers than to find new ones.

karim0028




msg:3171335
 11:30 pm on Nov 28, 2006 (gmt 0)

PB,

How many searches were there in your niche? Im new to all this, but I just did a word tracker search and i found out that the keyword i am gonna target gets around 700 searches.... Now, i am not sure how accurate this is; i read that it says it got ~700 searches in 90 days. Now, that sounds extremely low from what i see.

But, there are stores out there and they seem to be making money; or they wouldnt be staying in business. Right?

pbradish




msg:3171361
 11:48 pm on Nov 28, 2006 (gmt 0)

Hard to say - truthfully(sp?) I still need to do a bit more research, and I think that you've inspired me to do so.

700 searches seems very low. Was that just for one specific search engine and one specific keyword? I've been told to use the Overture tool and literally multiply that by up to seven to find the real number of Google searches for a particular keyword. If I were you I would think up 10 or 15 searches a potential customer may use to find the products you will be selling, and tally up the search totals for those keywords.

karim0028




msg:3171372
 12:03 am on Nov 29, 2006 (gmt 0)

Honestly, im sooo new to this im not sure. It was through Word tracker. It was for one keyword, but i dont know how wordtracker comes up with its numbers...

What was wierd though is that it said that the PPC was around 1.18 for the keyword... Which seems ungodly high since no one is advertising for that keyword (honestly , not a single ad)...

Is there another way to look this up or someway to understand this info.... Your saying 15 times more, anyone else concur with this.

I would tend to believe you about the 10-15X factor since as a sanity check i tried another keyword and it said that "<snip>" had ~12,000 searches in 90 days which seems really low as well....

[edited by: lorax at 12:42 pm (utc) on Nov. 29, 2006]
[edit reason] edited adult language [/edit]

karim0028




msg:3171416
 12:50 am on Nov 29, 2006 (gmt 0)

apologies, meant multiple of 7 not 10-15

etechsupport




msg:3171791
 9:35 am on Nov 29, 2006 (gmt 0)

You need segmentation to understand the market size that should be based on need, product & customers based segmentation. For best result its important to find out the unfulfilled demand and need of particular niche especially if you have great solution to fulfil the unfulfilled wants and need of particular niche.

RedWolf




msg:3172499
 7:20 pm on Nov 29, 2006 (gmt 0)

One thing to be aware of is that the no AdWords on Google could be a problem for you. In the old days, that usually meant that there was no competition, but now there can be other reasons.

One is that the keyword is on Google's secret "bad things" list. These are topics that are either illegal or often just unpopular with Google management. The only way to find out is to try to start a campaign using the words and seeing if it gets pulled.

Another new wrinkle is the variable minimum bid requirements. There are a number of keywords that Google feels they should get more money for than the old minimum bid amount of 5 cents. Some of these they want anywhere from 50 cents to several dollars for. I have a couple of terms that used to be fair money makers for me at 10 cents that Google now wants many times that. When the items in question only sell for $10 to $20 it just isn't worth it to advertise on those words any more. I have noticed that just about all my old competitors have decided the same thing and now it is common to see no ads for the keyword, or maybe one or two new people trying it out. Luckily, I am in the top 10 of the organic search results on most of them, so it isn't too bad not to advertise there for me.

ccDan




msg:3172532
 7:42 pm on Nov 29, 2006 (gmt 0)

Another new wrinkle is the variable minimum bid requirements. There are a number of keywords that Google feels they should get more money for than the old minimum bid amount of 5 cents. Some of these they want anywhere from 50 cents to several dollars for. I have a couple of terms that used to be fair money makers for me at 10 cents that Google now wants many times that. When the items in question only sell for $10 to $20 it just isn't worth it to advertise on those words any more. I have noticed that just about all my old competitors have decided the same thing and now it is common to see no ads for the keyword, or maybe one or two new people trying it out.

If true, that suggests to me that Google is entering the early phases of its ultimate demise as top dog.

Bidders will bid up a keyword to the point where it is no longer profitable for them to do so. Everyone will try to reach the top of the heap, until doing so undermines their profitability.

Now, if Google is deciding for itself (rather than letting the market decide) that certain keywords ought to be worth more, than they are artificially raising the value of those words. And, as your example shows, reducing or eliminating the market for those keywords.

And that means less revenue for Google as well as less revenue for publishers who use AdSense. A percentage of a 5 cent per click ad is worth more than a public service ad that may appear in its place.

If Google is manipulating the ad market like that, either they are planning on entering those markets with offerings of their own or AdWords has reached a point of stagnant growth, and Google is looking for ways to increase revenue. You know, to pay for the stuff they buy that doesn't produce revenue...

Either way, if this is true, we're looking at the beginning of Google's decline.

karim0028




msg:3172572
 8:22 pm on Nov 29, 2006 (gmt 0)

So, im wondering when you guys say put up an ad and see if it gets pulled.... Where should the ad link to? I dont have a site yet? This is part of the planning stages..

karim0028




msg:3172576
 8:26 pm on Nov 29, 2006 (gmt 0)

Also, how much should i do the ad for is $50 good enough, less, more?

karim0028




msg:3172580
 8:27 pm on Nov 29, 2006 (gmt 0)

Oh, one other thing i forgot to ask about.... I had read that google starts out the bid high until you get a good CTR on the ad then the prices get lower. Is that true?

Oliver Henniges




msg:3173971
 8:01 pm on Nov 30, 2006 (gmt 0)

If you want to refine your understanding of what a niche is, I'd recon a brief look at the TAT TVAM ASI in the upanishads, oh Shvetaketu. Alternatively, the basic principles and antinomies of set theory.

I find google trends quite interesting. It doesn't give you absolute figures, but I guess it's much more realistic than overture due to google's search volume (particularly because the former is of no value for our german lexemes).

To my experience, any search term that at least DOES show up in google trends is good for some 20k turnaround a year. The interesting part of the long tail oscillates along this threshold. I can only talk about bricks and mortar businesses.

I doubt you will find out about the potentials of any niche without any practical experience. Either from inside a company you work for, or by just giving it a try with whatever you are willing to risk.

karim0028




msg:3173976
 8:06 pm on Nov 30, 2006 (gmt 0)

TAT TVAM ASI in the upanishads, oh Shvetaketu...... Is that english? Im not trying to be cheeky; but i have no clue what that is....

I would love to knowow you recommend i check google trends?

karim0028




msg:3173980
 8:10 pm on Nov 30, 2006 (gmt 0)

I just googled it ;)

karim0028




msg:3174267
 12:04 am on Dec 1, 2006 (gmt 0)

Anyone have any input on how much to spend on ads when testing the potential traffic of a niche? Is $50 good, more or less? Also, if you dont have a site yet where do you direct the traffic?

Thanks

Oliver Henniges




msg:3175263
 8:39 pm on Dec 1, 2006 (gmt 0)

> Also, if you dont have a site yet where do you direct the traffic?

Another basic misunderstanding, I'm afraid: Fool's day is dated in April, not December.

Candid India




msg:3178534
 11:35 am on Dec 5, 2006 (gmt 0)

I completely agree with Steve

So to determine if a niche is worth it you have to take into account all your fixed and variable costs and then calculate how much you have to sell to be profitable.

you have to analyse about what your conversion rate will be. and accordingly how many visitors yuo require per day.

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