Part 1: Profit potential matters. Think niche and profit.

It would be quite easy to write 20 pages on how to choose an industry. But the bottom line is to think "niche", try to "solve a problem" and make sure there is a demand and profit potential.

If you are developing a web site to make money it makes little sense to write if there is no audience. You have to make sure there is a demand. The demand factor ties in nicely with thinking "niche" and solving a "problem".

Do not choose "cars". Rather focus on "How to buy a car for less". Do not pick "Health". Choose "Get rid of bad breath". You get the picture.

Demand, supply and profit potential

So how do you estimate demand and profit potential. There are several ways. Some cost money and some are free. The two most popular tools are Wordtracker and Overture (free). Visit the resources section for information about Wordtracker and Overture. Both these services will show you how many times any given term was searched for in the search engines last month. A lot of searches means great demand. And that is a good thing.

But demand does not equal profit. You need to check out the supply as well - your competition. This is simple. We are interested in free traffic from the search engines so we quite simply coduct searches in the main search engines and see how many results that are returned. The number of results is usually displayed in the top right corner of the page. The fewer the results returned the better, given the same demand.

To summarize:

Demand = Number of searches in the search engines for a given term

Supply = The numer of results returned in the search engines for the same term

Profit potential = Demand divided by Supply.

What is a good profit potential? 100? Maybe 1000? I prefer to look at the result of the profit potential calculation as a relative number - a benchmark. Choose a couple of niches, do the calculations and you will soon see that the numbers vary greatly. Picking a potential winner is not difficult. The bottom line is that when evaluating possible niches the Profit potential calculation will help you separate the "do's" from the "dont's".