How to Find a Profitable Niche Market

If you’re looking to find a niche that’s profitable and worth your time and effort, there are several factors to keep in mind.

In this article, I’ll discuss how to find a profitable niche and how to asses whether investing time, effort, and money into that online market is worth it.

Sticking to the best practices in this guide, will increase your chances of success and give you the confidence you need, to make the correct business decisions.

Note: to get the most out of this tutorial, you’ll need access to niche research tool (I use SEMrush). You can also use any other SEO tool or research platform for doing your research.

What is a Niche Market?

A niche (or segment) is a part of a larger market and is focused on a specific target audience. A target audience member is a  potential customer, who has characteristics, needs, wants, and problems that are unique to them.

By identifying specific problems or pain points of the audience members, you can provide highly focused solutions. These can be product ideas in any shape or form (physical or digital products).  

Benefits of Targeting a Niche Market

Targeting a niche can have several advantages:

  • Less (or weaker) competition – there usually is less competition, or sometimes no competition yet. This allows you to strongly position your business and products with more ease.
  • Build authority faster – by providing a highly targeted solution that perfectly aligns with the needs of your target audience, you can build authority quickly.
  • Lower budgets – depending on the situation, highly targeted messaging, in a market with less competition can be cheaper. Of course, developments within the niche can change this.
  • Build relationships – when targeting a smaller group of people, it’s easier to build trust and cultivate quality relationships.

Below is a list of principles for identifying and choosing the best niche for your online business.

It’s a practical framework that I use to explore profitable affiliate marketing niches. However, as mentioned in the beginning paragraph, the process is the same for any niche.

This process of finding and choosing a niche includes both personal, as well as data-driven criteria.

How to Find Your Niche

There are several ways of identifying a potentially suitable niche. Maybe you already know what niche you’d like to enter because you have a passion or interest in a specific subject.

Another way is to do niche market exploration, with the aim of identifying a need, pain point or problem. As a result, you can develop or offer an existing solution.

Either way, critical questions to ask yourself are :

  • What do you want to achieve? What are your goals? Having a vision is an important reference point for making decisions.
  • How can you add value? How can you solve the audience’s pain point(s)? Do you have a revolutionary product idea or service, or can you improve an existing solution?
  • Do you have a plan (or roadmap)? Setting measurable goals (SMART criteria) will help you structure your activities, and keep track of your progress.

Generally, you should document answers to the questions above in business and marketing plans. How to write an in-depth business plan or marketing plan, is beyond the scope of this guide as they include descriptions of strategies, tactics, timelines, and budgets which are specific to your unique situation.

For finding and choosing your niche, however, it’s enough to pay close attention to the fundamentals covered below.

You will be able to write a full business and marketing plan, later on.

Note: If you haven’t done so, have a look at these niche research tools. It’s an introduction to the tools you can use for assessing niche potential.

Consider your Passion, Interests, and Expertise

Starting an online business of any kind takes some time and effort. For most people, staying motivated is the only way to learn the necessary skills and stay focused enough to do the work that’s needed.

Choosing a niche that’s the right fit, is one of the best ways of staying motivated.

While searching for a suitable niche, ask yourself:

  • What are your hobbies? What do you love?
    • For example: if you love fashion, then maybe you’d like to start an online boutique, where you sell second-hand clothing.
  • What expertise do you have? What special gifts do you possess? Is there anything that you are very good at?
    • For example: If you love jewelry, and you’re creative, you might think of starting an online jewelry store, to sell your hand-made pieces.

If you believe you don’t have any hobbies, passions, or obvious talents, you can:

  • Ask people you know. In what way are you unique? What is it they admire about you? Maybe there’s something you do so well, it’s become second nature, which is why you can’t see it.
  • Take a test to uncover your talents. You can find many of these tests online, but you can also ask a professional for an assessment.

Brainstorming your passions, interests, and areas of expertise, as well as thinking of business ideas that align with those things, is personal and subjective.

More fundamentals for choosing the best niche are covered below. These are data-driven criteria and insights you’ll come across by doing niche analysis.

Takeaway: consider a niche that you’re interested in, or passionate about. This helps to keep you motivated over longer periods. Lack of motivation is one of the main reasons many people fail at building a successful online business.

How to Analyze Niche Market Potential

Being passionate about a topic and having the right expertise is only part of choosing your niche. To make the best choice, you’ll need to assess the niche’s potential. This includes getting a clear picture of profitability, growth potential, and difficulty.

This is where doing niche (or market) research comes in.

Note: Every business (and situation) is unique. The criteria covered below will give you a good understanding of how to assess a niche’s potential. Depending on the niche and yourself, some criteria will carry more weight than others.

Niches (markets) are always changing. An upward-moving trend can be a good thing until something happens and it turns. Don’t overcomplicate things. Be rational, note down your findings, and start testing your ideas.

Niche Profitability

Assessing niche profitability will show you if a niche is, or can become lucrative for you. Books have been written on the subject of market profitability. However, a general evaluation will go a long way.

Below are some quick ways to gauge a niche’s profitability:

  • Presence of paid advertising. If companies are spending money on paid ads, it usually means they are making money.
  • Types of advertisements. If the advertisements are pointing to sign-up pages or lead magnets, it suggests profit is being made on the back end. Reverse engineering the funnel can give a clear estimation of profitability.
  • Advertising history. If paid advertisements are present over a longer period, this suggests the ads are successful. Otherwise, why keep running them?
  • Cost per Click (CPC). A high CPC indicates heavy competition. Companies willing to pay high prices for a click means there are high profit margins.
  • Presence of commercial keywords. While doing niche keyword research, are you seeing any transactional or commercial keywords showing up?
  • Trend Analysis – An upward-moving trend means profitability is on the rise. A downward-moving trend means the niche shrinking or dying out.
  • Exposure and Social Media Mentions. How popular are your topics on social media platforms and sharing websites?
  • Availability of Affiliate offers. The availability of affiliate offers indicates vendors are trying to grow their business by attracting affiliates. You can check the availability of affiliate offers by searching Google or checking out affiliate networks.
  • Search volume. Monthly Search volumes are never exact, yet, they can still give you an indication of the relative size of a niche. For more information about this, have a look at these articles about niche keyword research guides.
  • By calculation (industry metrics). In some cases benchmark conversion rates are available. It’s easy to estimate potential profitability, by taking into account estimated niche size, cost of promotion, and margins.

Growth Potential

The growth potential of a niche (or market for that matter), depends on many factors. There are many external forces, such as the economic situation and buying power that play a role. As usual, books can be written on the subject.

What’s most important though, is to get a general picture of how the niche is developing. Is it growing, shrinking, or is it stable? Some of your business and marketing strategies could very well be influenced by this.

Niches can grow in different ways. Many times these different situations overlap, or one leads to the other

Again, I recommend not overthinking, but keep monitoring developments in your niche. In a niche that’s growing (or has the potential) the following situations are (in my experience) quite common:

  • The target audience grows. The more famous products and services get, the bigger the audience becomes. Once you notice the audience is growing, it indicates the niche is growing.
  • Competitors enter the niche. The more popular and profitable a niche, the more competitors will try to enter the niche. With time the niche gets more saturated, and before you know it, product and service diversification is happening.
  • Brand positioning. Competitors will try to carve out their place in the niche. This is done by position and branding. As a result of targeting different needs, the niche slowly (or quickly) develops into a broader market.

Try to stay ahead of the developments that lead to the growth of a niche. Again, this is done by doing periodic research.

Below are some basic criteria for gauging the growth potential of a niche:

  • Upward and emerging trends. Are you seeing an upward trend? Are you seeing related trends emerge?
  • Increasing search volumes. An increase in search volume over time is an indication of audience growth. More people are searching for a topic (which can be a product or service)
  • Product diversification. When related products start popping up, it’s usually because a new need emerges in the niche and businesses are tapping into the opportunity. This expands the niche.
  • An increase in competition over time. If you’re identifying more competitors over time, there is probably enough niche potential to house more businesses.

Below is an example, to illustrate the most important thought processes.

Niche Difficulty

The barriers and challenges you need to overcome to enter a niche, determine the niche’s difficulty. The overall difficulty, for a large part, depends on how strong the competition is. This is why there’s a separate section about competitive analysis.

Generally, and to get a quick picture of the difficulty of the niche, the following things are important:

  • Barriers of entry.
    • Rules and regulations. Some markets have special rules and regulations. Being aware of this can save you time, money, and headaches. For example, CBD oil cannot be advertised on Google PPC, meaning you’ll have to generate traffic in different ways (content creation and SEO)
    • Investment needed. Is entering the niche realistic, in terms of the investment needed? Would you need to buy PPC advertising? Do you need to hire an SEO professional (or do it yourself), are you creating your content, or are you planning to outsource the work?
    • Time investment. Do you have the time to put in the work necessary to start and build your online business? How much time do you estimate it’s going to take to get things off the ground, depending on what your research tells you?
  • Level of competition.

    Rate your competitors in as many ways as you can. What are they doing well? What are they not doing well? What’s to like and what’s not to like? Do you think you can compete with them?

    Below are some practical activities to assess the level of competition.
  • Get to know your competitor’s products and services
    • Analyze reviews about your competition
    • Use their product or service for a while)
    • Make use of their customer service
    • Ask in-depth questions
  • Check out their website and social media profiles
    • What type of content are they creating? (video, articles, etc.)
    • What topics are they talking about and what’s generating engagement from the audience?
  • What are their promotional activities?
    • Are they using paid advertising (PPC)?
    • Are they focused on generating organic traffic (SEO)?
    • Which social media channels are they using? Linkedin, Facebook, Twitter, Tiktok, Reddit, Quora, and so on.
  • What weaknesses do you notice? For example:
    • Their product can’t compete with yours. This would be something to emphasize.
  • What threats can you identify? For example:
    • Competitors are suddenly publishing content at an extremely high rate, and you might not be able to keep up.
    • You notice competitors’ organic traffic or the number of backlinks to their web pages is increasing quickly, and you have no idea why.
    • Websites in your niche are getting penalized by Google, and you need to figure out if you’re in the firing lane.
  • How are they positioning and branding themselves?
    • What is their messaging like? (professional, informal, clear, not so clear, etc.)
    • How do they describe themselves (as the best, as innovative? etc.)

Reminder: The criteria above are general and will go a long way. Depending on the situation and skill set, you’ll probably think of other ways to get an overall image of the level of competition.

Competitive Analysis

Directly researching the competition goes a few steps further than gauging overall niche difficulty (‘level of competition’- as mentioned above). The biggest difference is that’s focused on uncovering opportunities, and finding ways to outperform your competitors in certain areas.

Doing in-depth competitive research will give you the insights you need to make decisions about strategies and tactics to outperform the competition.

Examples of what questions to answer by doing competitive research can be:

  • How to outrank your competitors on Google. An analysis of what it would take to outperform competing pages in search engines. This can be done through several different audits (series of checks).
    • Assessing domain strength. Understand more about the domain strength of the competition. This includes metrics that influence the domain’s ranking power, such as domain authority (DA) and backlink profile strength.
    • Identifying keywords and topics to build content around. Find out what topics your competitors are targeting, so you can build highly optimized content that competes.
    • SEO auditing. Analyzing your competitor’s SEO strategies and activities. Are they doing a good job overall? What are they missing? What can you do better?

You can use an all-in-one research platform like SEMrush, or any other quality SEO tool to perform this research.

  • Reverse engineering competitor strategies. Identifying what’s working and what’s not, so you can build more effective strategies for your own business.
    • Customer journeys and sales funnels. Sign up for competitors’ newsletters, and lead magnets and go through their customer journey (sales funnel). It shows what’s working and saves you time when building your own.
    • Content (marketing) strategies. Research what content belongs to each phase of the competitor’s sales funnel. Analyze the tone and messaging. Where are they selling? Where are they informing? How are they trying to convert the visitor?
    • Content gaps. Can you identify any content gaps (opportunities)
  • Assess how to add value. Creative thinking will allow you to think of ways to add more value than your competition.

    Reversing competitors’ strategies and performing quick SEO audits can be effectively done with SEO tools. Content creation and optimization can be simplified by using AI SEO tools, such as

Competitive analysis is an ongoing process. Competitors enter (or leave) the niche, markets change constantly, trends turn, and so on. Every situation is different, which is why I’ve included an example of a simple competitive analysis, including a conclusion below.

Positioning and Branding

Based on the insights and findings you’ve collected until now, you’ll be able to assess what positioning and branding you’ll need if you choose to enter the niche.

As with the other fundamentals, positioning and branding your business, product, and services be complex. For choosing a niche, you can ask yourself some basic questions.

Questions to ask are:

  • What’s your USP? How are you going to be different from the competition? What’s unique about your business, product or service that makes it stand out? Standing out is important because it influences important things, such as the ability to compete, pricing, and so on.
  • Branding. Think about the face of your business, product, or service. Again, standing out, while still aligning to the expectations of the audience is important. Branding can be visual (by design), but also by communication (messaging). Depending on your niche, creating appeal through branding can be very important.

Note: Positioning and branding can be more crucial, depending on the niche you’re considering entering. For example: if you want to start an online clothing shop, your brand can be very important, because the target audience is more sensitive to brand names, design, and so on.


By analyzing the insights and findings from doing niche research in certain areas, while paying attention to the fundamentals and criteria in this guide, you can asses potential niches for any type of business.

Whether you want to evaluate a blogging niche, fashion niche, or any other type of niche market, the way to find the most suitable niche is to analyze the data and draw rational, simple conclusions.

There are no secrets to finding the most suitable niche, and there are no standard ‘best, or most profitable niches’ for certain types of business. Niches are constantly changing and developing. 

The best target market for your online business, is one that has good potential (profitability, difficulty, competitive analysis), while at the same time is aligned with your interest, expertise, and skill set. 

Affiliate Disclosure: This publication may contain affiliate links. See the disclosure notice at the bottom of this page for more information.
SEMrush - All-in-one Research Platform
SEMrush is the most comprehensive research platform for entrepreneurs and digital marketing professionals.
Arm yourself with over 50 research tools for SEO, PPC, content marketing and competitive analysis.
What I use SEMrush for:
  • Discovering keywords and topics with high value and low competition.
  • Analyzing and decoding the strategies of my competitors. Making decisions about how to attack the market. 
  • Uncovering profitable niches and entrepreneurial opportunities
Digital Marketing Strategist - Lex Gabrees
Lex Gabrees
Digital Marketing Strategist / Consultant
I’m a digital marketing professional with over 20 years of experience helping entrepreneurs and small to medium sized businesses succeed online.
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