Are you thinking of building a new site?
Before you do, it pays to take a look at your competitors. By choosing the right sites to compete against, you can gain significant advantage.
Firstly, you need to position your offering relative to your competitors.
1. What Problem Do you Solve?
Making money is mostly about solving problems. Write down the problem you're going to solve. Be specific.
- Provide auto repair training to amateurs
- Sell bomb detectors to airlines
- Sell ice to Eskimos
For this article, we'll use the idea "sell ice to Eskimos". No doubt you've already spotted the problem with this rather lousy business model, but let's have a look at what a bad idea looks like within this evaluation process.
2. Who Is Your Audience?
You may have noticed I included the prospective audience in my examples above. Know what you're selling, and to whom.
Demographics, in other words.
Who are you customers? What do they want? What type of language do they use? Build up a profile.
In our example, our customers are Eskimos. Eskimos live around the North Pole region, mainly in Siberia, Alaska, Canada, and Greenland. Internet access is obviously going to be an issue, not to mention language barriers, which is about the point the idea should die.
Yet, surprisingly, many prospective web businesses never address this simple question. Various Web 2.0 businesses clearly didn't ask questions 1 & 2. Presumably they jumped straight to the "how can we get a few million dollars in VC?" question instead.
3. Where Are Your Customers Hiding?
You need to get in front of your audience.
SEOs know a lot about keyword research, so have a huge advantage over others when it comes to finding out who their competitors are, and where the opportunity lies.
- SEM Rush
- Google Traffic Estimator
- Google Keyword Tool
- Google Search-based Keyword Tool
- Seobook Keyword Research Tool
- Microsoft Ad Intelligence Add-In
Find out the keyword terms your potential audience use, conduct searches, and make a note of the big players under those keyword terms. Keep in mind that language people use on search engines is always changing. There are more queries that are longer and more specific. These give you valuable insights into how to position your offering.
What questions are people asking? What problems are they trying to solve? What are the many different ways they describe that problem? What keyword areas are your competitors missing? What value can you provide that they do not? Have your competitors missed lucrative keyword areas?
4. What Is The Nature Of The Market?
You should look for rapidly growing markets. You want to avoid established, declining markets, unless you can provide a new layer of value that is difficult for competitors to emulate.
Take a look at the type of sites you intend to compete against. Are they big companies? Are they hobby blogs and thin affiliate sites? It's going to be much easier for your new site to compete against the thin affiliates and hobby projects than it is to compete against the establishment.
One of the common stumbling blocks at this point is solving a non-problem. The "ice to Eskimos" market is not dominated by established players, or hobby blogs for that matter, but there's a good reason for that - Eskimos don't have a "lack of ice" problem. Beware of the Web 2.0 trap - solving the non-problem.
5. What Related Markets Exist?
If the market you were thinking of entering is competitive, are there any closely related markets you can enter? You can find these areas by looking for patterns in the keyword research results.
Let's try "fitness". Notice any patterns here?
You might notice there are numerous searches for fitness locations i.e. a gym, a center, a club. So, instead of targeting fitness in terms of health, which would see you up against established health organizations and generalist publications, you might want to target the fitness center section of the market e.g. a comparison of gyms and centers. Such a niche could possibly be more lucrative, as there is a clear money making opportunity as people need to pay to join these facilities.
Which brings us onto...
6. Is there Potential To Make Money?
Just because a lot of people are doing something, doesn't mean it is worth doing.
Some areas are difficult to monetarize. Science, for example. And social discussions. Some area's are saturated, making it very difficult to find a new value layer to add. SEO, for example.
How easy would it be for one of the major players to copy your value proposition? Look for areas that have a clear path to monetarization and that aren't dominated by major players, or saturated by sites with little to distinguish them.
Good luck in your hunt for a lucrative niche :)
If you want to see a video presentation on how to evaluate competitors, Aaron has more in the members section.
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