How to Find a Niche for your Online Business

There are three common problems when it comes to finding a lucrative niche for an online business. And the reason why they're problems is because there's conflicting, yet valid points to each side of the coin. Problem number one. Passion versus profit. One group of people will say to pursue something you're passionate about, or else you will fail. And the other group will say to follow the money, because passion isn't going to pay the bills. Problem number two. Low versus high competition. One party swears that low competition niches are the only way to go, because you can get traffic faster and you won't have to compete against behemoths with bottomless wallets. And the other side says that you have to go for high competition niches, otherwise you're limiting your earnings potential. And problem number three. Micro versus broad niches. Or the age-old question, how niche should I go? Now, finding a niche that's right for you isn't a coin flip. And there is no magic formula that's going to give you that answer. And that's because there is no generic solution to these problems. Finding and choosing a niche will come down to a mix of personal and business decisions. So in this tutorial, I'm going to show you how to find a niche for your online business, vet and research that niche, and actually choose one that's going to meet your personal style and business goals. Stay tuned. Alright, so before we get into solving these problems, there are two things we need to do first. Number one, define what a niche actually is. And number two, talk about how to find niches. And the answers to the three problems I just discussed will help you to actually choose a niche. So let's get on the same page and talk about what a niche is. Simply put, a niche is a segment or a smaller part of an industry. And this segment has a community with their own specific needs. For example, backpacks for hiking is a niche. Backpacks are a segment of the larger industry of bags and luggage. And the audience is hikers, which has a pretty big community. Now, whether you want to monetize through t-shirt sales, affiliate marketing, or whatever, all of the research methods and principles that we'll cover today can be applied to your business. But because we can't cover every possible business model, for this tutorial, let's say that we're looking for niches for an affiliate website. This way, we won't have to discuss things like the cost of inventory, logistics, etc. Alright, so let's talk about some ways to find a niche. The first way is to dig into a competing website's traffic and financial information. There are website marketplaces like Flippa and Empire Flippers, where sellers are required to include traffic and financial information. So assuming you have no idea what kind of niche you want to enter, you can get started by going to Flippa.com. And since we're looking for affiliate ideas, I'll hover over Browse, then Content, and choose to look through Blogs. Next, I'll filter for just revenue-generating sites. Now, after skimming through the results, I came across this listing. And right away, you'll see things like the site's age, monthly profit, profit margin, and monthly page views. Scroll down a bit, and you can see the revenue breakdown over the past 12 months. Scroll a bit more, and you'll see data that's been imported from Google Analytics. Now, to get a very basic understanding of profitability, you can take the average profit and divide it by the average page views. So that would work out to around 3 cents per page view. Again, this is just a very general way to understand how much money you can make if you were to rank for the same topics in the same niche with the same monetization method. Alright, the second method is to use Google Ads data as a proxy to commercial value. And this can be done using a metric like traffic value, which is an SEO metric available in Ahrefs' Site Explorer. And traffic value estimates the value of a website's organic traffic if they were to pay for that same traffic through Google Ads. So in this case, our blog gets around 300,000 monthly search visits, and the value of that traffic, if we were to pay for it through Google Ads, would be over half a million dollars per month. And that's because SEO and digital marketing are pretty lucrative topics. So basically, this method is based around the theory that if advertisers are paying top dollar to appear for these keywords, then there's likely going to be commercial value. Alright, so to find niches with high traffic value, you can use a tool like Content Explorer, which is a searchable database with billions of pages of content. Now, if you have a general idea of the area you want to create a website around, then enter that in the search box. But in our case, let's say that we're open to any niche, but we want it to be an affiliate site. So I'll search for Amazon Associates because people often include some kind of Amazon affiliate disclaimer on their pages. Next, let's set a website traffic filter with a minimum value of 5,000. Meaning, websites that show up should be getting at least $5,000 worth of monthly organic traffic if they were to pay for it with Google Ads. Now, to filter out these megasites like Amazon and CNBC to name a few, we can set a domain rating filter. And domain rating is an Ahrefs metric that represents the overall strength of a website's backend profile. And it's generally a good way to filter out highly authoritative sites. So let's choose the domain rating filter and set it with a maximum value of something reasonable like 40. Next, let's set the one-page-per-domain filter since we only need one result to see a website's total traffic value. From here, you can skim through the results and just eyeball the domain names to see if there are niches or industries you can tap into. Alternatively, you can go to the Websites tab to scan through the top 100 websites. And again, let's start at the table by traffic value. And just from eyeballing the domain names, this one seems to be related to sleep, another on pies, and one related to vegetarian or vegan diet plans. Now, the domain names will give us a general idea of a product or industry. But if you want to dig deeper, you can research the pages that are actually sending these sites traffic. So I'll click the caret beside sleepdeliver.com and head on over to the Top Pages report, which shows the pages that send the most search traffic to the site. Now, if you have the experience, skills, and resources, going after a ton of sleep-related products at once could work out well for you. But if you don't, then you might want to stick with one product to create content around. For example, looking at this website's Top Pages report, you'll notice that the majority of pages sending organic traffic are related to bed frame reviews. So this might be something worth exploring further. Alright, so if you go through these two methods of finding niches, you should be able to jot down a bunch of interesting ideas for your site. So let's move on to the next, and perhaps most important part of finding a niche for your online business, and that's to research and vet it. Now, in the vetting stage, you'll want to get more detailed information on your brainstormed list of niches. This way, you won't be committing to anything without knowing exactly what you're getting yourself into. So the way I like to vet sites is in two buckets. The web bucket and market bucket. The web bucket includes things related to your website, like how you'll get traffic to your site, and how competitive it is to get that traffic. Understanding this information will ground you in reality by understanding your competition better. Now, the market bucket includes things related to the industry and products you'll be recommending or selling. So that would include things like sustainability, or the overall trend of the niche, and seasonality if any. Understanding these factors will ensure you're not entering a niche that might fade over time or has already faded. Alright, let's talk about figuring out how you'll get traffic to your site. More specifically, I'm talking about optimal traffic sources. Paid ads, social media, and search engine optimization are just a few traffic sources that tons of websites use. And they're all great, but they each come with their pros and cons. Paid ads are great if you have the money to spend because you can literally get traffic to your site within an hour from setting up your campaign. Now, the downside is that you have to pay for web visitors. And the moment you stop paying, you'll stop getting traffic. On top of that, you're adding a potentially sizable expense, which makes being profitable more difficult, especially if you're selling low-ticket items. Now, social media traffic can be great because it's free and fast. But if you don't have a big following, then it's tough to actually get traffic from these networks. Plus, a huge downside is that the shelf life of social media posts tend to be very short because most social networks are designed to surface new and fresh content. As for search engine optimization or SEO traffic, it's free, passive, and consistent. But the downside is that it takes longer to actually rank your pages compared to the other two traffic sources. Now, the primary traffic source that you choose should be a blended decision of your time frame, resources, expertise, and your competitor's main traffic sources. So to find out your competitor's main traffic sources, just search on Google for a keyword that's relevant to your business. So as an example, if we were to go with a bed frame affiliate site, I'd search for something like, best bed frames. And from here, I'll just skim the results for a website that looks like it's solely about sleep or sleep products. So I'd ignore sites like Gear Patrol and the New York Times and focus on a website like sleepfoundation.org. Next, I'll take that domain and enter it into SimilarWeb. As you can see, they get well over 5 million monthly visits to their site. And if we scroll down, you'll see that nearly 90% of it comes from search engines or via SEO. So if I were to create a competing website, that's the traffic source I'd focus on first. Alright, the next thing in the web bucket is traffic competition. And this will boil down to the main traffic sources you're going after. Let's keep running with the bed frames example. Since we've established that search traffic is likely the best traffic source to go with, we'll need to look for two things. Number one, is there enough search demand in this niche? And number two, how hard will it be to actually rank for these keywords? After all, if you can't rank for relevant queries in your niche, then you won't get any traffic. Now, the best place to find this information is with a keyword research tool like Ahrefs' Keywords Explorer. So to get started, just search for broad topics related to your niche. So I'll search for bed frame and bed frames. Next, go to the matching terms report, which will show you keyword ideas that include your broad topics along with each query's monthly search volume. And we also provide a keyword difficulty score, which estimates how hard it'll be to rank in the top 10 of Google. Now, since we're creating a hypothetical affiliate website, we want to find a mix of informational content and product comparisons. So to narrow in on these queries, I'll click the include box and search for words like how, what, who, when, where, best, versus, and review. Finally, I'll set the any toggle since I'm good with keywords that include any of these words and hit apply. And just from a quick search, it looks like keyword difficulty scores are low to mid-competition and with a cumulative search volume of over 100,000 just in the U.S., it seems like there's plenty of search volume just around bed frame related queries. Now, there's a lot more that goes into analyzing competitors in search engine results pages. But rather than turning this into an SEO tutorial, I recommend watching the Keyword Research module in our SEO course for beginners where I go deeper into these things. I'll link those videos up in the description. Alright, let's move on to the market bucket. And again, this is where we're researching things related to the actual market, industry, or product like the long-term trend of the niche and any seasonal factors. To do this, just go to Google Trends and type your niche or product in the search bar. So I'll search for a bed frame. Next, you'll want to choose the country where your target market will be. So I'll choose the United States. And finally, I'll set the time frame to the longest option to get a high-level view of searches for this topic over time. And interestingly, there's actually a clear upward trend for people searching for bed frames. Now, as for seasonality and other factors, it seems like bed frames are popular year-round. But what's interesting is that searches in July and August consistently spike every single year. I'm not sure the reason, but it may be worth noting for your promotional efforts. Now, to give you an example of seasonality, look at the trend for the query, garden house. There are huge spikes starting in the spring as the weather gets warmer and searches start dipping towards the end of summer and into the fall and winter as the weather gets colder. This is what seasonality looks like. And niche sites that are season or holiday dependent will have lower revenue in the slower months. So if this is the niche you're entering, beware. Now, with these methods, you should be able to find plenty of niches with profit potential. But everything we've discussed to this point is purely about finding. And finding niches usually isn't a big problem. It's choosing the niche that often prevents someone from starting their online business or persevering through the rough patches. And this brings us back to the three problems in choosing a niche. Profit versus passion, low versus high competition, and micro versus broad niches. Let's tackle these problems head-on because your answers will actually help you choose and stick to a niche, increasing your probability of success. So let's talk about the battle between profit versus passion. Plain and simple, you don't have to love your niche in order to make a profit. But from my experience, it's a lot easier to make money doing something you enjoy rather than doing it for just the money. Because what I've personally found is that while I can start a site and get traffic to it, money alone isn't enough motivation for me to want to grow that business. On the other hand, I know a few very successful people who create niche sites on topics they don't care about. And they're not driven by money. But a key difference here is that these people are driven by marketing and creating great teams to build niche sites for them. In other words, they may not be passionate about the niche, but they are passionate about the process. So the answer to profit versus passion is going to come down to what you're driven by and or your level of tolerance. Alright, the next dilemma is about choosing a low versus high competition niche. Now, because earnings potential for an online business heavily relies on traffic, your decision should be based on a balance of your skills in marketing, your resources, aka your bankroll, and the level of competition you'll be up against. But I also want to make a note that niches aren't necessarily exclusively low or high competition. There's often a mix of topics with varying levels of competition. So if you're starting a new site, a viable strategy is to start with lower competition topics, even if they may not be super commercial, until you've built your brand and website authority. And from there, you can start going after more competitive topics. We have a video on assessing ranking difficulty, so I'll link that up in the description. And finally is the age-old question, how niche should I go? This question is strongly connected to the problem we've just solved. It'll largely come down to your skills, resources, and the level of competition. But to help you come to a more solid answer, in general, I think it's worth starting as niche as possible with the intention to expand and go broader. Here's a simple exercise. Think of your niche in a hierarchy and where it fits. For example, you might want to go after a niche about bed frame reviews. And within this niche, you can talk about the best wooden bed frames, the best adjustable bed frames, the best bed frame for people with king-size beds, and so on. And you can even go deeper and review specific models of these products, adding another layer to your hierarchy. Now, a website with bed frame buyer's guides isn't exactly a tiny niche. But it's also not huge, meaning you're eventually going to come to a point where the hierarchy ends. So at minimum, I think it's good to be able to build at least two levels down. But what's even more important is that you have the potential to actually niche up. For example, bed frames fall into the category of sleep products. And so do pillows, mattresses, and sheets. And each of these products can have their own mini-hierarchies of subtopics. And if you're able to successfully execute on each sub-niche, you can create a super authoritative website covering lots of topics that are highly relevant to one another. Best of all, as you build your authority in each of these niches, the next sub-niches you tackle will only grow faster because you'll be building a stronger brand and website authority. So rather than asking yourself, how niche should I go? You should ask yourself, can I expand my topic hierarchy by branching out to related sub-niches? So take a look through your list of niches, ask yourself these personal questions, and you'll be well on your way to finding and choosing a niche. More importantly, you'll have a better chance of starting your online business on the right foot. Now, if you enjoyed this video, make sure to like, share, and subscribe for more actionable marketing tutorials. I'll see you in the next one.