It is important to determine how easy it will be to generate revenue in a particular niche. To do this, we look at what potential advertising exists for that topic. While there are a lot of other ways to monetize a blog advertising is the best way to test a niche because it's so universal. Thanks to Google's Adsense and similar networks, any site can earn at least some money, even with very little traffic. As a general rule, if you can amass a large audience and high levels of traffic, it will be possible to generate revenue by selling advertising.
However, the sums advertisers are willing to pay to reach a particular audience varies wildly. Consequently, in some niches only the very biggest sites can get the volume to turn a profit, while in others, much smaller players can still do well.
Of course, knowing that eventually the very best blogs in a niche will make money is small comfort when you're just starting out, investing a lot into the new business, and aren't sure whether your blog will ever get to that top tier. It's much better to be in a niche where you know that even some success will surely reap benefits.
Here are three quick tests you can do to give you an idea of how profitable a niche will be. You may wish to go through this process with a few different topics to see how different ones compare.
1. Check Adsense
Google Adwords Traffic Estimator
Adsense is Google's ubiquitous text advertising service. It's generally not a very high-yield source of ad revenue and it can cheapen your image, however it is very useful for figuring out whether a niche attracts advertising dollars because it is so popular in virtually every niche.
The Adwords traffic estimator is actually for ad buyers, however we can use it to assess how much advertisers are willing to pay for certain keywords. In the example below, I've entered a few different niche keywords: photography, gardening, iPhone, and mortgage.
As you can see, there is a tremendous range. A keyword like "mortgage" can bring in a lot of money per click (between $11 and $16), while "gardening" is down around the $1 mark. You can also see the estimated clicks per day to see that a blog about mortgages that had a lot of traffic could potentially be a license to print money. Of course it's also probably very difficult to make a popular site about
mortgages and there are likely to be a lot of make-money sharks out there trying to capture those keywords too, so it's important to understand that this is only one half of the equation. Try looking at a variety of other keywords and niches to get a feel for what the ranges are and what
advertisers are interested in paying for.
2. Look for Affiliate Programs
Affiliate programs are referral schemes offered by companies selling products and services. A typical affiliate program will pay every time you send them a lead who then buys a product or service. This is usually done through an affiliate link that you can embed in a blog post or use on
a banner. Affiliate programs are a simple, self-service way of generating revenue. For testing purposes, the presence of a lot of affiliate programs is a good sign for a niche, because when used effectively, they can be quite lucrative.
A good place to find affiliate programs is an affiliate marketplace like CommissionJunction. Browse through the site to see what companies related to your niche are offering programs. Ask yourself if readers of a blog in that niche would be likely to buy products and services from the various vendors. For example, readers of a photography blog would be fairly likely to buy photographic equipment, so companies selling those types of goods who offer generous affiliate programs would be a great sign for such a blog.
3. Research Competitors
In the next section we'll discuss how to find potential competitors in a niche. When you are researching these other blogs, pay attention to how they are making money. If it's through advertising, try to find out what their rates are and how full their inventory is. If it's through some other means, ask yourself whether it's a form of monetization you can see yourself applying on your new blog.
Competitors are probably the best way of assessing how much money is in a niche, as they are there ahead of you doing the hard yards. For example, you might think there is going to be a lot of advertising dollars in a niche, but find that the biggest site in that niche has half its ad inventory empty. This would
be a very strong signal that advertising revenue is not easy to come by. Of course, once your blog is established it may very well end up being larger, better, or more successful than these competitors, but until then, it's a good idea to use them as a yard stick.