Every internet marketer knows the importance of discovering good and profitable niches. However, the common understanding of the steps to do this discovery is very limited:

1. Choose a topic that you like, have experience or are interested in.

2. Take the main keyword from this topic and plug it into a keyword research tool.

3. Look at the Global search count. If it is about 150,000 per month, it’s a good niche. If it is below that number of searches, there is very little market and therefore it is not a good niche. If it is way above that, there is probably too much competition and therefore it is risky to enter this niche market.

That’s it. Based on those three steps, you are supposed to find a niche. What’s wrong with this view?

Firstly, there is no research into the competition. No step is taken to discover how strong a competition you face in that niche.

Secondly, there is no research into long-tail keywords. Long-tail keywords are defined as keyword phrases of at least 3 words (the more words, the better). The  importance of long-tail keywords is that the ppc competition is less and the ability to target a buying audience is greater than short phrase keywords. Long-tail keywords are the keys to lucrative sub-niches.

Thirdly, there is no research into the tendency of the searchers to buy. It’s not only a matter of whether the searchers have money or not. Some people in a particular niche market may have money but are not intending to buy anything.

So here’s how the gurus do their niche and keyword research:

1. Examine your own interests, abilities, knowledge, experiences. Anything from these may be a potentially good niche to market to.  The reason for this is that it is easier to sound enthusiastic and knowledgeable about subjects where you really are.

2. Identify what’s hot in the market i.e. what is currently the most talked-about thing, what’s buzzing or new in town. Is this a potential niche?

3. From the above two steps, identify potential niches. Then run these potential niches through these ‘filters’:

a. Are people in this niche ready to buy and not merely information seekers or looking for freebies? For example , the topic “How to score 99^th percentile on the SAT examination” ,  would probably not be a very lucrative niche because it would interest only students who may not have the money to buy anything much.

b. Is there a problem that the people in this niche cannot solve themselves? Any niche involving technical expertise would nicely fit into this criteria. For example, ‘how to solve Windows Vista registry problems’ would likely be a good niche because very few people are technologically competent enough to deal with these problems.

c. Do the people in this niche have an urgent crisis that needs to be overcome? The more urgent the better. For example,  a topic on  ‘how to stop your teenager’s drug habit’ is an extremely urgent crisis that begs for answers.

d.  Is this niche a passing fad?  It’s OK to choose a fad niche that might have only a short lifespan, if you plan for it and if the short term gain will be worth more than the time and money you might spend building a site and a reputation in the niche.  If you are looking for a niche site you can ‘set and forget’, one that, once it starts paying, will pay steadily with only minor maintenance, then you want to avoid fad niches, no matter how hot they are in the now.    A site on how to improve a golf swing is an evergreen need, compared to a site bearing strategies for just one specific hot new video game.

4. Once you have identified a potentially profitable niche based on the steps above, it is time to look for some long-tail keywords. These long-tail keywords will reveal some sub-niches which you can further profit from. For example, if you type in ‘golf swing’ into Wordtracker, or Google’s Keyword tool, you would get a whole list of related searches.  Look for keyword phrases with four words or more. Some of them are ’stack and tilt golf swing’, ‘biomechanics of golf swing’, ‘what is the proper weight distribution during the golf swing’ etc.

5. To find out how much competition there is in this niche, simply type in all the keywords you have into Google’s free keyword analysis tool. This tool will give you the estimated advertiser competition (which is the same as marketer competition), average search volume for the previous month and average monthly search volume. The great thing is that this tool also gives you synonyms for the keywords, which means you get more keyword suggestions. Use the tool to identify keywords with as little competition but as many searches as possible.

The steps above represent a complete way to find profitable niches and the relevant keywords that go with these niches.

The Affiliate Summit AffStat 2010 Report is available.  It is posted at www.affstat.com website.

Now, I admit to being a stats geek, so you may not be as excited about a statistical account as I am.  Sorry.

However, I do find a number of insights from examination of the report.   One survey question, in particular asked what niches affiliates work in.  Thirty niches were presented, and of those, there were 13 niches that each had less than 1% of the responding affiliates working in them.   The top three niches each had about 8% of the respondents : Computers & Electronics (8.9), Health & Beauty (8.5), and Office & Business (7.5).  The next third of the niches were attracting 5-7% of the affiliates each.

What causes this clustering of affiliate marketers?  Is it cause, or effect?  Obviously, there is a huge market demand for the merchandise marketed in those top three niches, but there is also huge demand in some of the 1% niches.  So is it possible that the merchants in these niches also do the best job of attracting and developing affiliate marketers?

Does the high degree of  affiliate participation mean anything in relation to the profitability of the niche?  In the 1% niches, such as dating, there are some super affiliates who made careers and fortunes, so does it follow?

Affiliate marketing is a popular way to earn extra income or even to replace your day job. In addition to the fact that many affiliate programs are easy and free to join, it is commonly believed that it is also the easiest way to make money on the Internet. Whether you have a website or not, you still can promote affiliate programs and generate income. However, if you want to build a career as an affiliate marketer, you must find top affiliate programs to promote.

Some programs have certain characteristics that hat mark them as top programs. What are those characteristics?

1. They have a good reputation for paying their affiliates on time. Do your best to avoid programs with payment problems.   One way to avoid such programs is to avoid startup companies.  Look for a company  that has at least three years of sales history and demonstrated profitability.    You can find out about a company’s reputation in the industry by reading industry blogs and forums.

2. Good affiliate programs to promote are those that have products that are in high demand by the public. We all know that the public determines the market.  Don’t waste your  time and energy promoting programs that most people are not interested in buying.   For example, according to the 2010 AffStat Report, the top two niches affiliate marketers work in are Computers & Electronics and Health & Beauty.  Niches like Medical, Real Estate, and even the Pets niche are worked by less than five percent of affiliate marketers responding to the Affiliate Summit survey.

3. Top programs provide their affiliates with marketing tools to promote their programs, they have good customer service and affiliate support systems. Affiliate marketing is a partnership between the merchants who own the programs and the affiliates who promote them. As an affiliate, it is important to have partner who cares about your success.   The 2010 AffStat Report contains three pages of recommended affiliate information sites.  The forums listed are good places to learn about specific programs.

4. Good programs have accurate affiliate statistics. As an affiliate, you need to be able to alter your campaigns and make necessary adjustments whenever the market changes.   Without an accurate system to track the performance of your campaigns, you won’t know about problems until you see it in your paycheck.

Everyone has different circumstances. The best program for one is not necessarily the best one for others. Therefore, do careful niche and program research and then be prepared to test different programs. By monitoring the results, you will be able to determine the program that best suit your purpose.

My name is Carol Buchalter. I have been a worker in the computer industry since 1989 and I have watched most of its development bloom, die, reform and bloom again from my eddy as an expert in relational database application support, systems analysis and business analysis. I am actively engaging in the internet at this point. I am a certified Affiliate Program Manager and I am open for business.