How to Find Profitable Niche Markets

One of the struggles that many people have when seeking to build niche websites, is actually finding a market that has lots of advertisers that pay well.  This is particularly important if you are monetizing your site with Google Adsense or other forms of advertising.

One method that I have discussed in detail to find those keywords that pay well, is using the Cost Per Click (CPC) displayed on the Google Adwords Keyword tool.  However, this number can sometimes be deceiving.  For example, I currently have a website that is based on a keyword that has an Exact Match CPC of $1.38 in the adwords tool.  However, in reality I am only making about $0.07 or $0.08 cents on average per click!  What happened?  This caused me to dig a little deeper as to why I could have picked such a low paying keyword when the adwords keyword tool suggested differently.

My 3 Mistakes

I made 3 mistakes – I didn’t look at the broad match cpc, I didn’t look at the amount of advertiser competition (more is better), and I didn’t think about the overall profitability of the market.  If I simply would have looked at the broad match cpc, I would have seen that this broad keyword only pays $0.28 rather than $1.38.  So, what’s the difference between broad and exact match CPC?  Well, usually there is not much difference.  However, in this case there was and I now I think its always a good idea just to check both match types.  More importantly, I think if I would have looked at the amount of competition a little closer then a red flag may have gone up for me.

Check the Competition

The level of competition available on the Google Adwords keyword tool shows the number of advertisers that are paying to display ads based on this keyword.  Google only shows whether the keyword is Low, Medium, or High competition (and the green bar displays how low or high).  So, if you are building niche websites you actually want to see High competition in this case because that means more advertisers are willing to pay for this keyword – more advertisers usually means there is more money for you in the market.

So, if I would have looked at my keyword, I would have seen low competition and known that the $1.38 CPC was probably an anomaly.  If there are only 3 or 4 advertisers, and one is bidding $1.50 to be first, but the rest are only bidding $0.05, then the chances are that you are going to be getting $0.05 clicks on your website.  What you need is lots of competing advertisers bidding over $1.50 or more to really start to expect to see $1.50 clicks on your site.  If the competition is High for a keyword, and the CPC is also high, you can start to feel a little more comfortable that the keyword data is more reliable.

Is the Market Profitable?

Finally, its also important to look at the overall profitability of the market that you are going into – not just the single keyword.  If can see that the overall market has lots of money spent on advertising in it, you can be more certain that the keywords you are targeting will pay well.  In fact, even if you discover keywords that say they only pay $0.05 or $0.10 – they actually might be worth targeting if the overall market has a lot of ad dollars being spent!

For example, a HUGE amount of money is spent in the education market (think University of Phoenix, etc).  In fact, University of Phoenix spends over $20 million per month on Online ads (its probably much more now as this article is from 2008: http://paidcontent.org/article/419-displays-big-spender-university-of-phoenix-category-continues-to-wait-f/) Its possible to find keywords in the online education market that only have a CPC of $0.05 on the adwords tool. In fact, I just found one – “online schools for education” according to the Google Adwords keyword tool only has a CPC of $0.05.  I promise you that this keyword pays WAY MORE than $0.05.

The adwords keyword tool shows that similar keywords in this market are paying closer to $5 to $15 on average.  So if I were to build a niche website around the keyword “online schools for education” I would fully expect to get paid at the higher CPC – not $0.05.

Broad Match CPC Better?

The reason is mainly because of the amount of money that advertisers are spending in this market.  The discrepancy may occur because maybe less advertisers are targeting “online schools for education” specifically; but LOTS of advertisers are targeting “online schools” or “online education”.  So, your website will mention “online schools”, so you will still get advertisers for this keyword even though you are targeting “online schools for education”.

Anyway, hope some of that made sense.

So, one great way to find profitable keywords is to simply target those markets that you know have a lot of advertising dollars being spent.  This will ensure that you know there are advertisers spending money, and you are sure to get some great CPCs for your sites.

Let me know your thoughts below!

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Related posts:

  1. Niche Site Challenge 2: How to Find a Niche
  2. Day 1: How I Will Choose My Niche Keywords to Target
  3. NSC (Niche Site Challenge) 4: My Niche Revealed
  4. Day 3: My Overall Process for Building Niche Adsense Websites

20 Responses to “How to Find Profitable Niche Markets”

  1. Perfect sense I have sites that are on the low end and only earn around $0.05 but somedays they end up earning around $0.67 but they usually get lots of $0.05 clicks so if they all paid the $0.67 it would probably be around $10 per day. Thanks for the advice I think I need to spend a little more time digging first.

    • Andy, it sounds like you have a similar situation to what I explained. You probably just do not have enough advertisers in your market willing to pay much. Unfortunately, sometimes we just have to learn through experience.

  2. Once again a very informative article that opens my eyes about cpc. Thanks, Spenser.

  3. Hi Spencer!

    Thanks for the interesting idea. As i see from my adsense sites (not many) CPC also depends on what placement in my 250×300 is clicked on – top one usually brings in over 1$ for my main adsense money maker, the rest is usually under 1$ (I mean advert #2-4). Totally agree on competition – the more, the better obviously for CPCs we get per click.

    Best,

    Grand

    PS – I see a HUGE drop in affiliate sales now, but HUGE spike in adsense CPCs now, too bad I have only 17 small sites )))

    • Yep, your ads at the top will ALWAYS earn more (doesnt matter what size they are). This is because the higher paying advertisers are listed higher.

      Also, yes its interesting to see the trends in online advertising are on the rise! This means more adsense earnings!

  4. Just want to mention that what you see in AdWords keyword tool should be treated as guideline only. The CPC is for advertisers that are advertising on Google Search network and not every advertiser advertises on Google Content network.

    As exact match vs. broad match, i think exact match should be ignored since this is only for advertisers that target exact match keyword on Google Search network. And if more advertisers target exact match keyword, the CPC goes higher since exact match keywords are known to have high conversions compared to broad match keywords. I still do not know if exact match applies to those advertising on Google Content network.

    • Yes, this is a good point. I agree that the adwords tool is only a guideline. It really is for advertisers to determine what keywords to spend funds on. And you are correct that this tool does not properly reflect the CPC for the content network (which is where are niche sites are).

  5. Bertil Jenner who has a good product about Adsense recommends(and uses) using that green bar in the Adwords tool to determine if you enter a market or not-the higher the competition the better..

    I think his product is Adsense Blueprint or something like that but he knows his stuff..
    Terry

  6. Very interesting post. How do you know the cpc for each advertisor? Also is there a way to know if the .05 words will pay more? Would you go to a less niched phrase that is 2 words rather than 4 and see what the cpc is for that one?

    Deb

    • Its impossible to know the CPC of each advertiser. Google only displays the average CPC for all advertisers. I don’t think you can ever know 100% what a keyword will pay; however, if you look at the related keywords in the adwords tool and their respective CPCs – this will give you a good idea. Yes, I think perhaps looking a broader niche keywords is a good idea.

  7. Thanks for sharing Spencer. Very enlightening. My own niche in accounting shows the same thing. I always wondered why!

  8. Spencer, this is a very good article. I have not really paid much attention to CPC and competition using the Google Adwords tools as I don’t do PPC. But from your article, I should pay more attention to help find more profitable keywords. thanks.

  9. Hey Spencer. Thanks for this post. I had a question though. Let’s say google is showing a nice CPC for a keyword both broad and EXACT…but then I put the keyword in Spyfu and it brings back NO RESULTS at all. Basically saying that there are NO advertisers for that chosen keyword…

    How would you go about that?

    Thanks man!

    • Omar – great question. You can never know 100% on a keyword, but here are some ideas.
      First, check related keywords to see what sort of cpcs and advertisers they have.
      Second, type your keyword into google and see if there are advertisers. Also, you can find a related article on ezinearticles.com (do a keyword search on ezine) and look at what type of adsense ads are there. Are they targeting your keyword? If so, thats good news.

      Hopefully those couple of ideas help out…thanks!

  10. This post totally reminds me about my beginnings. I was looking for high paid kw, but forgot about competition. After I made couple of modifications to the site (wider selection of kw)I started to get more traffic and more clicks (better paid ones).

  11. Just awesome I am new to your blog but I am loving the content and knowledge you are providing I just branched out into adsense niches myself and find finding it a little challenging but looking forward to the rewards keep up the good work.

  12. I just started with this IM business and it’s really hard to find some good niche … i’m learning with help of Challenge.co but still did not find good niche … thank you for your tips … hope will help me :)