Will Your Niche be Profitable

After all of the variables including keywords, demand, supply, and pay per click costs have been collected and copied into your spreadsheet, you can finally put some formulae to work and make some educated assumptions about how profitable your chosen topic might be.

The assumptions made below about sales and conversion rates are based on industry averages. Your own results may be much higher. Let's hope so, because I think assuming a one percent conversion from clickthrough to sales is very low, based on my own experience.

Here are explanations of how the calculations in the following table were made.

• Keywords - Self-explanatory

• Demand - Equals the number of searches at both Overture and Findwhat for the month, for that term.

• Clicks - Based on an average 1.5% clickthrough rate from pay per click listing. I believe this number might be low, based on the relatively low number of advertisers for many of the keywords below. My own clickthrough rates vary from a low of .01% for keywords positioned very low in the listings to a high of 30% for a keyword that isn't even in the top three listings. Time and tweaking of your own campaigns should produce a better than 1.5 percent average.

Formula: - Demand x .015 = Clickthroughs

• Sales - I'm assuming an average 1-percent conversion rate from clickthroughs to sales. Again, I feel that this number is lower than it should be, however, it is a fairly typical conversion rate for affiliates. Super affiliates do MUCH better than one percent however. I'll discuss how to improve your conversions to sales in a later section.

Formula: - Clickthroughs x .010 = Number of Sales

• Commission - The number of sales x $20.00 per sale. I am basing this on my own average commission per sales figures. At this point in our research, that number is still hypothetical. We'll find out later when we do research into affiliate programs and products how much average commission amounts are likely to be.

Formula: - Number of Sales x $20.00 = Commission

• PPC Cost - The number of clickthroughs multiplied by 6 cents. This average cost per click is an arbitrary number based on my own experience with PPC's, and is a cost per click averaged across multiple pay per click search engine advertising campaigns. Formula: - Clickthroughs x $0.06 = PPC Cost

• Net Profit - The amount you can take to the bank. Formula: Commission - PPC Cost = Net Profit

Keywords

Demand

Clicks

Sales

Commissio n

PPC Cost

Net Profit

wine

415398

6231

62.31

$1,246.19

373.86

$872.34

wine rack

56830

852

8.52

$170.49

51.15

$119.34

wine making

21395

321

3.21

$64.19

19.26

$44.93

white wine

11610

174

1.74

$34.83

10.45

$24.38

wine label

10698

160

1.60

$32.09

9.63

$22.47

wine accessory

17652

265

2.65

$52.96

15.89

$37.07

wine bag

7760

116

1.16

$23.28

6.98

$16.30

wine glass

10490

157

1.57

$31.47

9.44

$22.03

wine charm

8411

126

1.26

$25.23

7.57

$17.66

wine recipe

6499

97

0.97

$19.50

5.85

$13.65

wine enthusiast

6926

104

1.04

$20.78

6.23

$14.54

wine making supply

4345

65

0.65

$13.04

3.91

$9.12

home wine making

2494

37

0.37

$7.48

2.24

$5.24

wine making kit

2298

34

0.34

$6.89

2.07

$4.83

wine making equipment

1079

16

0.16

$3.11

0.93

$2.17

wine making recipe

812

12

0.12

$2.39

0.72

$1.67

making rack wine

441

7

0.07

$1.32

0.40

$0.92

wine making process

433

6

0.06

$1.27

0.38

$0.89

home wine making supply

315

5

0.05

$0.95

0.28

$0.66

wine making label

169

2

0.02

$0.49

0.15

$0.34

making homemade wine

158

2

0.02

$0.47

0.14

$0.33

wine making accessory

122

2

0.02

$0.36

0.11

$0.25

fruit wine making

121

2

0.02

$0.36

0.11

$0.25

wine making grape

111

2

0.02

$0.33

0.10

$0.23

Total

586567

8437

84

$1,687.43

506.23

$1,181.20

Based on a very narrow selection of keyword and keyword phrases, our hypothetical net profit for the month amounts to $1,181.20. That's not bad at all, for one little site about wine making. Imagine repeating the process with nine more topics and having more than ten thousand dollars to play with every month.

As mentioned above, I felt that both the PPC clickthrough and conversion to sales rates were low. What happens if we increase these numbers?

Assuming a PPC clickthrough rate of 3%, we would come up with the following results:

Keywords

Demand

Clickthroughs

Sales

Commission

PPC Cost Net Profit

Total

586567

17597

175

$3,519.40

1,055.82 $2,463.58

Staying with our PPC clickthrough rate of 3%, let's see what happens if we work really hard to improve our conversion rate to 3%.

Keywords

Demand

Clickthroughs

Sales

Commission

PPC Cost Net Profit

Total

586567

17597

527

$10,558.21

1,055.82 $9,502.39

Even if we reduce our expectation of traffic delivery from the pay per click search engines back down to 1.5%, the net profit results are still astonishing.

1 Keywords

Demand

Clicks

Sales

Commission

PPC Cost Net Profit

Total

586567

8799

263

$5,279.10

527.91 $4,751.19

Pretty respectable, all in all.

Please remember that the example above does NOT include all the keyword possibilities I would use for this site. Nor does it take into account the traffic you will get from free sources which would skew those final dollar amounts upwards, provided the sales conversion rates remain the same.

Also remember that at this point, we are considering only profit POTENTIAL. There are no guarantees that our actual results will be as successful. They may in fact be MORE successful.

Only real-world testing of all we know and learn will tell us if our hypothesis was realistic.

You can also get some help from the following software...

Adwords Analyzer

Just as I was about to do substantial keyword research for some new sites this recently, I was introduced to Adwords Analyzer software that made my work SO much easier and less time-consuming.

Normally I use Wordtracker and Overture's Search Term Suggestion Tool to ferret out as many related keywords and phrases as 1 can... and I did that still.

Then I transfer all that data into an Excel spreadsheet and write titles and descriptions for my pay-per-click advertising campaigns.

Well, Adwords Analyzer showed me exactly on which keywords I should focus my time and attention.

In addition to displaying the number of searches conducted at Overture during the previous month for all permutations of the keyword entered, Adwords Analyzer also shows the number of web sites returned for each keyword and the 'results to search' ratio.

The interface ALSO displays the number of campaigns currently being run at both Overture and Google for each keyword and keyword phrase.

Hallelujah.

That shows me both where I need not waste my time, and more importantly, which phrases currently have few or no advertisers.

Super Affiliate Handbook That's the perfect scenario in the online world. A keyword or phrase for which there are tons of searches, no competitors and the bid price is cheap. The info is priceless and the software is very inexpensive.

^ http://www.adwordanalvzer.com/

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