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How to Find a Profitable Niche For Your Passive Website

Subject matter is the most important decision you’ll make when building a niche site. Why? The right topic can either make or break your site.

For me, I picture a chart that looks like the one below. On one axis you have the specialization of your site. If a website is too broad in focus, it’s difficult to get traffic from passive sources like search engines. There is simply too much competition. On the flip side, if the website is too narrow in focus, you won’t see traffic either as not many people are searching for that topic You want to be somewhere in the middle — a niche that has traffic yet you can still rank highly for.

On the other axis I visualize the commercial appeal of the topic. Are people spending money on the niche you’re discussing? If so, then you are likely to be able to monetize your site with advertisements. If your topic isn’t something that people spend money on, then it’s that much harder to earn income as advertisers don’t care about getting in front of those eyeballs.

niche idea map

Keeping this chart in mind, we suggest using a brainstorming technique borrowed straight from Pat Flynn’s Smart Passive Income to come up with ideas. Jot down a list of your 10 passions, 10 problems, and 10 fears.

Why this technique? First, it gives structure to your brainstorming. You don’t just stare at a blank sheet of paper. Furthermore, when you are coming with ideas surrounding topics that interest you personally, you will automatically be more excited to build a site around them. Remember, any niche you build is going to take a lot of research and time. It’s important that you’re excited about the subject matter. Here’s what a sample list could look like:

niche idea list

Once you have your list of 30 ideas, immediately cull out those that you simply know off the bat won’t work. If you think about the chart shown above, you’ll usually be able to cross off about half your list without a second thought.

This leaves you with some solid ideas to start researching.

Researching Niche Website Ideas

With your list in hand, it’s time to start some competitive research. A little research can save you a ton of headaches in going down the wrong path. You are looking for a niche that fits three different areas: low competition, high commercial appeal, and domain availability.

niche-idea-venn-diagram

1. Researching the competition

There are a number of tools you can buy to automate competition research, but I like to keep things simple and cheap. That means using Google.

Taking your ideas, plug each one into a Google search. Here you can gain a ton of information on the competition within a niche. Take one the problems listed above — I have a cat that likes to lick a small spot obsessively. We’ve taken him to the vet and tried medicines, but nothing works.

To research this niche, you can type “How to stop a cat from licking” into Google and take a look at the results. Specifically, you’re looking at what sort of websites rank on the first page. Search engine traffic is the fuel for passive income. Your niche has to be something where you can rank high in search results.

Take a look at what we found:

example search results

The top four results are the websites of the ASPCA, WebMD, and Cornell University — highly reputable and well-known organizations. The chances of a brand-new site displacing these sites is extremely low. In other words, this is a tough niche to break into. Better look for something else.

That’s not to say you can’t compete in a niche with well-established players. However, it creates a steep hurdle to overcome. If you do find a niche you like but where there are already established sites, then get more specific. Remember, the more narrow niche, the less competition.

2. Determining Commercial Appeal of Your Niche

After determining the niches where you can compete, you want to narrow your list more by figuring out which ones you can actually make money from. A basic rule of thumb is if someone spends money in your niche, then you can likely make money from it.

Passive sites focused on product reviews, travel, investing and others tend to perform well because people spend money in these areas. That means tons of advertisers who will pay to reach these audiences.

One way of determining commercial appeal is with the same Google searches you performed before. Are there ads that come on the results page? Are these ads likely to appeal to someone searching for those keywords? That’s a quick way to measure the appeal of your niche, but I’ve usually take it one step further.

Google offers a Keyword Planner tool for free to its advertisers. With this tool, you can enter in keywords that are related to your niche and see what sort of competition there is among advertisers (you want to see high competition, which drives ad prices up) and how much Google suggests bidding. It’s a great tool for seeing how lucrative the advertising on a passive site could be. The example below is an extremely lucrative set of keywords. I typically look for those in the $2.50-5.00 range.

keyword planner

3. Keyword-Rich Domain Name

After finding an idea and researching its viability, there’s one final step — seeing if a great domain name is available.

Domain names are important for niche sites. While sites like Yahoo and Amazon can get away with domains that aren’t very descriptive, you want a URL that is keyword rich and gives sense of your site’s content. Remember, SEO is key for passive sites. Keyword-rich domains help you rank higher in search results (though they are far from the only factor). Meanwhile, descriptive domains help users get a better sense of your site’s content, leading to higher click-through from Google, Bing, and Yahoo search results.

My favorite tool for domain searches is LeanDomainSearch.com (this is a great example of a descriptive domain, by the way). The site is completely free and easy to use. You just type in what keywords you’d like in the domain and it comes up with hundreds of combinations to choose from.

One final note on selecting a niche. You aren’t likely to find the perfect result after following these three steps. You might find a great domain but in a competitive niche. Or you might find a niche that will do well for advertising, but a keyword-rich domain just isn’t available. Don’t let that deter you. Perseverance is more more important than perfection. An imperfect niche that is up and running will always outearn one that never got off the ground.

Have more to add about finding that perfect niche or a question to ask? Let us know in the comments below.

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