How to Find a Profitable Niche Online Using Keyword Tools
“Pioneers are usually the ones lying face down in the mud with arrows in their backs.”
Are you struggling to find a profitable niche online? Well that’s probably because you’re trying to reinvent the wheel rather than building off others who blazed the trail. You’re trying to be a pioneer, but you’ll just end up with an arrow in your back.
I don’t blame you: it’s easy to be seduced by the belief of first mover advantage. But if you want to be successful, you have to let go of this belief.
First mover advantage is an idea that just won’t die. First popularized by Stanford Business School professor, David Montgomery, and his co-author, Marvin Lieberman, first mover advantage is the idea that winners in new markets are the ones who are the first entrant into their category. From the iPhone to Airbnb, Uber to Tesla, the startup world is rife with companies who make it big and become synonymous with “first”.
In reality, being first is pretty much a recipe for failure. First mover advantage is false. Nearly half of all companies that are “first” will fail. So who succeeds? The companies that enter early but not first, learn from the proverbial arrows in the pioneer’s back and ride the wave of market excitement to success. Companies defined as “first followers” have a mere 8 percent failure rate.
Don’t believe me? Consider Google: many people think of Google as “first” but much of the company’s success has been adapting and refining ideas launched by others. In 1998 a small startup called Goto demoed the first pay-per-click (PPC) advertising at the TED Conference.
It was not until two years later that Google launched its PPC advertising system known as AdWords. Today, Google’s parent company Alphabet is worth $498 billion and makes the bulk of its revenue from advertising like AdWords. Yahoo acquired Goto (then known as Overture) for $1.6 billion.
Yahoo, as we all know, squandered its initial market share lead and let wave after wave of innovation pass it by before being sold to Verizon for $5 billion– quite the fall from its glory days as a $125 billion behemoth.
Don’t be a First Mover, Be a Fast Follower
So why do fast followers win and first movers lose? First movers tend to launch before they fully understand their product features or customer needs. They make an educated guess at what will work and, if they’re lucky, they’ll generate enough PR clout to build momentum and get noticed. Maybe they’ll be acquired quickly and the founders will leave with a nice profit.
Most of the time this won’t happen: the founders end up burning through cash and the company fails. The people who do win are the fast followers. They learn from those arrows in the founders back. They refine their product or niche offering. They leverage prior success. And they go on to build a company that wins big.
Despite all evidence to the contrary, this misguided belief in first mover advantage continues to persist, adversely impacting would-be entrepreneurs of all stripes. Most of us aren’t cut out to be pioneers, much less successful pioneers.
We’re probably not going to start the next Facebook, Uber or Snapchat. If those are the companies by which you’re going to measure your own success, then you’re better off buying lottery tickets.
Here’s the thing: you don’t need to be a pioneer.
What you need to be is a smart, savvy fast follower who finds a profitable niche by analyzing the market & competition.
Remember, the guys who got rich in the gold rush weren’t the guys mining for gold. The folks who got rich were the ones selling the picks and shovels. If you want to build a successful business, set your own hours, and never worry about money again, then be the guy selling the picks and shovels.
How to Find Your Niche in a Proven Market
Step 1- The broad idea
I like to use several keyword tools tools to identify profitable markets. Lets say I want to start a business centered around “baby products”. This is to broad of a category unless you have millions of dollars to spend on advertising. I personally would work to narrow down this niche. To do this I would use the below tools.
- Google Adwords Keyword Planner – For this you will need to set up an adwords account, but this is free and easy. Then you will want to click on >tools>keyword planner, from here you can type in Baby Products and start to get an idea of what people are looking for. Here you can see that Baby Clothes seems to be a popular more defined niche.
Step 2 – Narrow it Down
From Here I Would Still Like to Narrow This Down
- For this I can head over to the LSIGraph keyword Generator. This will show us keywords that are semantically related to our main keyword. So I will search baby clothes on the LSIGraph to narrow our search even more.
Step 3 – The Competition
From here I can see that hip, cool, and trendy baby clothes seem to be what a lot of people are looking for. Now we are starting to narrow down our niche.
From here I will head over to Google and see what the results for this niche look like. I’m looking for something that isn’t too competitive, yet still shows opportunity. I want to see some advertisers in the space, this shows me that people are making money.
From here I Google “Trendy Baby Clothes”. Immediately I can see that this seems like an ultra competitive space, there are 27,900,000 results for this keyword and the top advertisers are all big name brands, Oshkosh, Gap and H&M. These are companies I don’t want to compete with.
From this search, I do learn something though. At the bottom of the page under Search’s related to trendy baby clothes, I can see that trendy organic baby clothes is a related search. This narrows down my niche even further. Now I have an even more defined niche.
Step 4 – Targeting Your Competitors
When I do a search for organic baby clothes, I see that now I’m onto something. There are only 1,160,000 results, the top 3 advertisers are all smaller companies targeting “Organic Baby Clothing and Trendy Organic Baby Clothing”
This tells me there is a market for this and that it’s no overly competitive. This is what I’m looking for when I set out to find a good niche. From here I will pick the top competitors and plug them into a tool like Spyfu to see what they are doing. Despite what most people believe, you don’t need to take over an entire industry or come out with the new hot product. You just need to narrow down your target audience and find the right niche.
If I take one of the top paid advertisers and plug them into SpyFu I can see that it estimates they are spending $3.6k a month in advertising. From my experience SpyFu is usually way low on their AdWords estimates, I like to usually double what they say. In any case, this shows us that there is money to be made in this space. From the looks of it, probably millions to be made. SpyFu will also give us the top paid competitors so we can start to dive in and see what they are doing.
Niche marketing is as simple as being a big fish in a small pond. Unlike some forms of marketing that target a broad audience or large group of people, niche marketing targets a very specific and well-defined audience segment. While your overall number of leads may be smaller, these leads will be far more qualified and more likely to convert. In essence, you’ll invest a lot less in acquiring qualified leads and generate a dramatically higher your ROI.
So which niche markets are best? Start by thinking about your end customer. We all want to be happy in a few key areas of life, including finance, relationships, health, and self-improvement. We want to have stable incomes and feel financially secure. We want meaningful and satisfying romantic relationships. We want to enjoy good health and lead long, active lives. We want to feel like our lives have meaning. These four desires are pretty universal and they give us our four “big” markets:
- Relationships and Dating
- Health and Wellness
- Self Improvement
Virtually every profitable niche market will fall into one of these broad categories. Take “Health and Wellness”. Within this broader market, you can find the following niches:
Health and Wellness
- weight loss
- exercising at home
Now, let’s get even more specific.
- How to lose weight after pregnancy
- How to get beach body ready in 6 weeks
- How to lose weight on a Paleo diet
Are you starting to see a pattern here? In general, successful niche marketing follows this formula:
Industry > Market > Specific Person > Reason
This formula narrows down what you’re selling, whom you’re selling to, and why you’re selling. It may also dictate how and when you sell. And herein lies the secret of niche marketing: find a profitable niche and make it your own. Don’t be a pioneer with arrows in your back. Be the fast follower who makes millions.