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But, how do you define niche?
How big is too big?
How small is too small?
Here is an example: a site on consumer loans.
Is consumer loans a niche? What if you break it down into home mortgages, auto loans, credit cards, personal loans, and payday loans . Is each one of these a niche, or is it still too large to be considered a niche?
What if you take car loans and break it down into new car loans, used car loans, leasing, auto refinancing, lease buyouts, and first time loans. Is each one of these a niche?
What makes a profitable niche?
How much money are you making from a niche?
What if you break it down into car loans, is that a niche?
Or do I need to break it down into something more specific, like used BMW loans?
Obviously, I could reach #1 in the SERPs with a site with keywords like "Loans for green 1993 Honda Civics." But, I would still get no traffic. Nobody is going to be searching for "Loans for green 1993 Honda Civics."
Whether it is loans, or widgets. How do you draw the line on defining a niche?
Don't underestimate the rediculous number of people and the rediculous things they search for. Don't underestimate, profitize.
Consumer Loans is one of the broadest categories in AM right now. Car Loans is only ever so slightly less broad. Even Used Car Loans still isn't a niche in most's opinion. Niche is where you start getting into things like "Used Car Loans for Honda's". Not telling you to target that exact phrase, but that's where the market research comes in.
Also, it's very interesting to note that you don't need a niche to do well. The bigger the pie, the smaller the piece you need. There's no difference if you make $1,000/month on a 1 million dollar industry in position 2, or $1,000/month on a 5 billion dollar industry in position 43,086.
Niches are powerful, but they can be overrated. Your best bet (if you have the time, knowledge and resources) is to attack a large market by breaking it down into niches, yet still covering every aspect. The difficult part is to do this without spamming, since the majority of internet users these days will click the back button if they land on a page of gibberish.
You don't have to be different, and this is something people are going to have to learn. This isn't an infinate market, which is something people need to understand. Eventually (and not too far off from now) people are going to run out of things to be 'different' with, so learn now. Don't be different, be better.
I guess you can only narrow down any particular market up to certain degree where you can be comfortable with its potential profit vis-a-vis competition and your current ability to compete. Go anywhere above or below that level and you'll find yourself grasping for air. The trick is in, I guess, trying to find your profitable comfort zone as soon as possible and progress upwards as your ability to compete improves.