Over the last few weeks I've been investigating niche website opportunities. I wanted to determine if one can create a stable revenue stream by creating websites focused at niche markets. There's a lot of information out there at the moment and a whole bunch of services claiming expertise in this field. There are many gurus and sites pitching products that will help you build your online empire.
As someone who is fairly technical and tends to lean towards more intricate projects that require some fun coding, I was mildly curious as to whether these non-technical content focused projects could be worthwhile. After a month or so of effort I want to share some of my findings:
The Niche Play:
The basic principle of this play is to create a website that is focused at a particular niche. You determine the niche by doing keyword research to find a set of search terms that will attract traffic, while also not being overly competitive. Once you have the keywords you are going to target and you have the site up, you start a campaign of content creation and search engine optimization. What you are trying to do is get your site to rank in the top 5 results for the search keywords you're targeting. When you achieve this - which can take weeks or months - you then monetize the sites using Google adsense or something similar. You can also link up with affiliate programs and sell visitors onwards to these products. In my opinion it's essentially internet marketing 101.
The Potential:
The potential really depends on how well you execute in each of the stages above. If you target poor keywords that don't attract enough volume, or don't convert to high value clicks then your earnings will be pretty dismal. If you don't conduct proper SEO then you won't rank high enough and long enough for the terms you're targeting.
There are definitely skills you need to learn here to be truly successful, and it can take a while to master them. Although my projects are ranking well and are fairly well targeted they're not generating that much revenue. However, it will take a few months of maturing to get to peak levels. Some other internet marketers out there are able to generate a few hundred dollars from a good niche site. The potential is therefore relatively small, but larger if you're able to scale your operation and manage many successful sites.
Very successful sites can grow into a few thousand dollars a month, but these are generally not the kind of sites you are going to be creating with this play. These elite sites required sustained effort in usually very competitive markets to maintain that kind of revenue stream.
The Problem:
I see a couple of problems with this business model which makes me fear for its future:
1) Search Rankings: The primary source of traffic for your sites is usually organic traffic from search results. Today it's still fairly easy to get a site ranked on the top page of Google. This will not always be the case however. The search engines are getting smarter and smarter at ranking relevant sites and penalizing low-value sites. Every week they optimize their search algorithms a little more. The net result is that in a few years time you are going to have make sure that your niche site stays very relevant, on topic, and constantly fresh to keep attracting organic traffic from the search engines.
2) Content Creation: Following on from the point above, sites will have to constantly feature fresh content to stay ranked. This creates a problem for scaling your operation. The more time you have to devote to updating existing sites, the less you'll have for creating new ones. You can of course outsource many activities, but this will only increase your costs.
3) Competition: More and more people are starting niche sites. Today you have to look for fairly long-tail keywords to find some uncontested space. This trend is only going to continue.
4) Advert Infrastructure: In my opinion the share of revenue you get from ad networks is quite small. You usually have to generate a large quantity of clicks to generate adequate daily revenue.
The New Play:
What all of this boils down to is that the niche play can work, but not necessarily in a very low-touch low-effort kind of way. Increasingly you are going to need to put more effort into maintaining a leadership position for your niche sites. Today low-touch can still work in certain uncontested niches, but that won't continue forever.
The new play in my opinion is creating a niche site that you can maintain for a long time and that you can monetize in multiple ways. I think the basic elements of keyword research and niche selection are sound, and should always be followed, but then real value has to be provided by the site you actually create. Google is going to find ways of determining which sites add value to their visitors, and they will rank these sites higher. They already rank sites higher if they create fresh content.
This might mean that you actually have to create fewer sites, and that you put more effort into content creation, visitor interaction, and revenue extraction. Just placing some Google ads on your site probably won't create the revenue stream you'll need.
This therefore means that you need to add a step to your initial research phase. This step is to think of ways that your site will actually add value to your visitors over the long term. As well as ways that you'll hook your visitors to keep them coming back. And finally, you might want to create an actual "service" that can be monetized in some way so that you don't have to rely on third party ad infrastructure.
As a final thought, I just want to say that this is my own opinion and no one else's. Just because I haven't been able to create large-scale revenue streams with basic niche websites doesn't mean it can't be done. I know it can be done, I just don't think it can be for much longer...
Dave
