How to Know about the Profitability of Market

You may decide to take upon a niche that is close to your heart and start creating products or promoting products in that field. After all, everyone says you have to be after your 'passions'.

I do not accept this approach. It may be your passion. But don't you want to run it as a business and get profits? That's the whole reason behind why you are looking at Internet marketing as a business. If your intention is just to play along your passions, then be prepared to run the show as an experiment, run into losses in case the market happens to be not responsive.

In business, first thing is you must know whether what you are doing is profitable or not. It is possible to know whether your proposed business is likely to be profitable even before starting the business. That's why the emphasis on market research.

Fortunately, on the Internet most of the data are available for free for you to study. Take Google search. Just type your niche market name. Google will present you with milllions of results pages and will display the number of pages found on the Internet on your chosen word or phrase (technically called the 'keyword'.

Then go to Google External Keyword Tool. This page gives you several details at once - no of searches during the month, competition level, no of searches, etc. Just look at the screenshot below to get an idea.

Fig. Google Keyword Tool - a sample search

There you can type several keywords at once. Google will not only display the number of searches done for the exact word(s) you typed, but also the number of searches for the current month and the level of competition (in the form of a small bar).

This will give you an idea what is the level of demand for the keywords you typed in. This is not to be taken as accurate by any standards. However, they are fairly good indicators of market proditability.

When you first typed in Google search you found thousands of pages coming up with relevant content on that keyword. You may call it the supply scenario.

When you next typed in Google External Keyword Tool, you discovered how many people have searched for the same word(s) during the month. So now you know the demand scenario.

Almost always you will find supply far exceeding demand. The supply-demand ratio (supply divided by demand) should be ideally below 100.

If the supply is too much, then you face stiff competition which business more expenditures, more efforts and more time. And still, it is unlikely to be a profitable market for the late comers. Those with surplus money can pump in cash to succeed in any market.

So you know the secret of finding out how to find profitable markets. Use different keywords related to your proposed niche and find out one sub-niche where the supply is reasonably low and the demand reasonably high.

There are other short cut methods which we will explore further tomorrow.