When Is A Niche Market Over-crowded?

By focusing on a very tight niche, and offering only products, services, and information within that niche, the market naturally gravitates to you. The world will begin recognizing you as the expert.

When investigating starting a business on the Internet, the advice you'll very frequently get is to build a business in a very targeted niche. You'll even be advised to find a niche within a niche in some cases.

By focusing on a very tight niche, and offering only products, services, and information within that niche, the market naturally gravitates to you. The world will begin recognizing you as the expert.

When someone is searching for information on that topic in the search engines, since your site is so focused, it naturally ranks higher.

Since you've spent a lot of time really researching the topic and related keywords, you should naturally perform better in the pay-per-click search engines too. Your focus will enable you to uncover advantages that others miss.

As you initially choose a niche and begin to do your research, you may notice that there are already a LOT of people in that niche. There are already a lot of established competitors. So you begin to doubt whether or not to get into that market. How can you be sure that you're not wasting your time by getting into an already saturated market?

My rather bold statement to clients who ask me this questions is that as long as you differentiate yourself sufficiently, you have NO competition.

If you enter a market where there are already a lot of sellers, that's a good sign. It means that people are interested in that product category.

If you check at the pay-per-clicks and there are already 500 bidders, that's a good sign. Usually, that means that the demand is so high that it attracted all of those bidders.

Your challenge, again, become to find a unique, unfilled need in that crowded market and fill it. How do you do this? You begin with research. Keyword research is the easiest way to do it.

Here's how I begin, and how I often have clients begin... Brainstorm, every term that you can think of related to your anticipated niche. Then use a keyword research tool to look for related terms. As you compile a list of more and more terms related to your topic, you're doing two things. You're searching for an under-served segment, and you're looking for terms that you'll target in your search engine marketing efforts later.

Absolutely the best tool that I've found for assessing the competition in a given niche is a piece of software called Ad Word Analyzer. With this tool you enter a single word or phrase. The software then queries the Overture (pay-per-click) search engine database. It finds all of the related terms that people did searches on in the past month.

Next, Ad Word Analyzer queries both the Google AdWords and Overture databases to see how many pay-per-click campaigns are already active. This gives you a very powerful snapshot of:

  • How many searches were done for each term last month
  • How many webpages there are targeting each term
  • The ratio of searches to webpages targeting the searched term
  • How many pay-per-click campaigns there are at Overture targeting a term
  • How many pay-per-click campaigns there are at Google AdWords targeting a term

That is very powerful information! If you see that a lot of people are searching on a term for example, but that there aren't many merchants targeting this market, it may be a good market for you. It may also not be a good market. It is entirely possible that the reason no one is targeting the market is because people interested in that topic are largely unwilling to spend money on things pertaining to the topic.

So a good place to start is with Ad Word Analyzer. It was created by my friend, and fellow Floridian, Jeff Alderson. You can get a copy of this essential tool at: http://TheRealSecrets.com/adword-analyzer.html

This is the place to start in researching your market. Your focus should be on doing keyword research and spending a LOT of time investigating the market before you start building a website or promoting a product.

Marty Foley and I have done two recent tele-seminars centered around choosing keywords, using pay-per-clicks, generating traffic, and increasing website conversions. Altogether these two tele-seminars are more than 4 hour of discussion and insights into building a finely-tuned marketing machine. I encourage you to check these out. You can grab both transcripts at: http://MasterThePayPerClicks.com

Getting back to the very basic question of when is a market overcrowded - it's overcrowded when you can't make a satisfactory return on investment in that niche. What you consider a satisfactory ROI is a personal judgement. It depends upon what you could get if you invested your resources in an alternative investment.

Frank, I don't see why you'd want to enter an arena where the competition is already very fierce... such as Internet Marketing. I've already shared with you (in earlier articles) that there are people quietly making six or even seven-figure incomes off in fairly obscure niches. My friend John Evans wrote about nine such people in his book Success Alert. This book is required reading for anyone I mentor or coach and is available at: http://Success-Alert.com

One final opinion on over-crowded niches.... Many people get excited about a potential product until they start their research. Then when they see that there IS competition, they use that as an excuse not to go through with the project. They then move on to another potential niche, and repeat the process. After they've checked out 20 different niches, and concluded that they're all too competitive, it's really time for them to take a serious look at their thought process.

Hopefully you do thorough research, but don't let a little competition stop you from entering a market. If there is no competition in a market, it's often because others have already investigated that niche and determined it to be a total waste of time. Sometimes it's good to follow the crowd... Just figure out a way to stand out in that crowd.


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