After reading How to buy a website as an investment, you have decided that it is something you want to explore. You understand the risks and skills required to run a profitable site and ready to jump in.
You go to Flippa.com or EmpireFlippers.com and find a list of potential websites you might want to purchase. Assuming this is your first site and you want to go with a content site, which niche should you pick?
Picking the right niche is essential for a few reasons. You want to invest in a niche that you know or at least enough interest that you will be willing to learn about the industry. Two, the niche needs to be somewhat profitable. We say “somewhat” because you can monetize almost any niche, but some sites will be easier to monetize than others simply because they are in the right niche.
Don’t go with profitability. Go with what you are interested in
We are talking about being an Active website investor. Although you can outsource a lot of the work, you still have to manage and run your investment actively. Running a website is like running any business. It is not easy. There will be moments of despair when traffic drops for no apparent reason. Your invested money is going towards new content that doesn’t show results. Constant research and tinkering can be very tiring. Therefore, if you only focus on the profitability of the niche when going gets tough, and you have zero interest in your investment besides the return, it won’t be easy to persevere. Although we are talking about finding a profitable niche, the question should also be how to find a sustainable niche.
Pick a niche for the long term.
So you know what your interest is, now think about the longevity of that interest. Active website investing is a long-term endeavor. Eventually, when you exit your investment, buyers will also be looking at the website’s long-term potential.
Think, will people be searching for what the website is offering in 5-10 years. Avoid fads and temporary niches. Technology websites typically fall under this category. The website explicitly focusing on a specific product version will lose its relevance very quickly when the new product comes out.
Steps To Find a Profitable Niche
These are the steps you can take to understand how to find a profitable niche in any industry.
Step 1: What Do You Know?
First, you need to think about what you know. What have you spent your life doing? There is a good chance you would be considered an expert in that industry. Therefore, you know better than anyone how to solve the problems of a specific target market. If you can follow your passion, you can find a good niche in which to invest. Investing in what you already know will make the process so much easier.
Step 2: Check the Value of the Niche
Next, you need to check the value of that niche. After all, if there is not a lot of money in that area, it will be a tall order for you to generate a good return on your investment. You can use several metrics, including RPM (revenue per mile) or CPM (cost per mile). In Latin, Mille means 1000, so this means the amount of money someone has to pay to get their ad seen 1000 times in that industry. This is one of the best ways to quantify the value of a specific area.
Value of the niche = How much advertisers are willing to pay to display ads on websites in that niche.
Top niches remain relatively unchanged over the many years they are your usual suspects: Finance & Insurance, Health & Fitness, E-commerce, and Marketing & Advertising. Again, because these are niches that advertisers pay well for, these are the most competitive niches to be in.
Understand the website’s RPM. When browsing Flippa, once you stumble upon a listing you like, look at the traffic report and income report to understand how much that site is earning per 1 thousand impressions.
Step 3: Identify the Problem of That Specific Niche
After this, you need to identify the specific problem that people in that area have. Then, you need to see if there are companies that can quickly and easily solve their problems. If that is the case, you will have an easier time finding suitable partners and companies in which to invest. Knowing how to expand the content on the site you purchase is crucial for growth.
If you understand the industry, you can explore related products or services to expand your website’s offering. For example, if you buy a website that talks about Soccer, and you are an expert on sports gear, you can quickly expand site content to soccer gear.
Step 4: Find Strong Companies with Great Products and Services
Once you identify the problem of that specific target market, it is time to find strong companies with great products and services that solve those issues. If you find a company that does a great job of solving that issue, you may have found your investment target.
Or, if you are planning on launching your own business in this area, you need to learn about the competition. That way, you can narrow your focus, find your niche, and generate a return on your investment.
How to find a profitable niche on Flippa?
To give you an example of how to find the niche site to invest in. Think of a niche you are most interested in. Let’s pick automotive as an example. Go to Flippa.com, and search automotive. On the left side, choose the “starter” site and “content” site.
Make sure the site is earning a Net Profit and traffic is verified with Google Analytics.
The Top Tools To Help You Find Your Niche
Suppose you are still unsure if a particular niche will be good. There are a few tools that help us organize the vast web into manageable bits. The following will help you understand what people are looking for and what websites exist to help solve the problem.
Answer the Public
Answer the Public is one of the most powerful research firms out there because you can see the specific questions that people are asking. If you want to find a profitable niche, you have to figure out what that target market is asking. Based on certain keywords and phrases, this is a tool that will develop relevant questions that your target market could be asking. Then, you can even do the data and visual graph tables, figuring out what matters most to you.
Feedly RSS Subscriptions
Another till you might want to use this called Feedly RSS Subscriptions. This is a great way for you to keep up with blog posts, articles, and forum discussions that can be helpful for identifying and learning about your target audience. You need to keep an eye on what is happening with a new market. If you can think about the issues your target audience is facing, you can identify trending topics that may help you meet their needs.
The internet is more competitive than it ever has been in the past. Therefore, you need to grow your competitive intelligence using Similarweb if you would like to build a strong digital marketing strategy. If you can understand the strengths and weaknesses of specific businesses while also keeping an eye on the competition, you can uncover new opportunities and find your niche. If you are able to use this tool to understand the intent of your customers, you can find a profitable area.
Given that Google is still the most popular search engine, it only makes sense that you should take advantage of the data that Google collects. That is where Google Trends can be helpful. You can spot the growth and decline of certain search terms, which indicate what people are looking for. In addition, you can take a look at popularity, search volumes, and the competition surrounding certain words or phrases. You can even see how the world reacts to global trends by taking advantage of Google Trends.
Facebook Audience Insights
One of the top tools you should use is called Facebook Audience Insights. It is not exactly a secret that Facebook collects a wealth of information about its users. Because it has a large base, if they do is representative of your specific industry. Therefore, you can use this tool to research your audience, figure out what they are looking for, and find a way to meet their needs.
To get idea of what is being shared the most in a specific industry, checkout BuzzSumo.com. Enter high level keyword that describes the niche you want to explore and see what is currently being shared the most on the web, social channels, who the influencers are and so on.
You know the topics you are most interested in, see what other websites exist in that space, use the tools above to find what is being talked about, share the most in that space, go to Flippa.com and be on the lookout for potentially an excellent web property to buy.
It might take many months until you find a great property to invest in. Remember that this type of investment carries significant risks. While you are searching, it is a great time to learn the skills required to invest in a profitable web property and look at other ways to diversify your investments either through traditional portfolios, ETFs, Real Estate, and other investment opportunities.