unprofitable niche?

[toddp]

hi guys,

I have a muse in mind, and would like to start testing it. However, the keywords I came up with for this muse are causing me some difficulty.

According to google adwords keyword tool, the 'broad' keywords for my niche are pretty popular, and therefor expensive (minimum bid 50c to $1). However, the more narrow words phrases (found by the overture tool) I've tried are available for 20c to 40c, but aren't providing nearly enough clicks.

I'm concerned that, if I put up a test page to capture emails/orders for this niche (even before I've developed the product), that it won't get enough traffic. If I do get enough traffic, it seems that I'd be paying dearly for it. How can I have a profitable product if each purchase costs me $20-$40?

example: $0.20 per click; 100 clicks => 1 purchase (assuming 1% conversion rate). cost to acquire that customer: $20

$0.50 per click ==> $50 to acquire the customer; and so on.

So, should I abandon this niche? Or go through with the test?

Is it reasonable to think I can collect 100+ keywords, each with miniscule estimated clicks, and make a go of it?

This is a learning experience for me, and I expect to go through several of these cases before landing on one that works for me; but at the same time, I'd rather not waste my effort on a muse that I can see from here will be unprofitable.

[laniers]

Please do yourself a big favor and go to www.thirtydaychallenge.com and they will lead you step by step through the entire testing process. Best of all it will cost $0.00. The methods they teach will allow you test several niches using free tools and sites so you will know before you spend a dime whether a niche is worth investing any money in. And believe it or not they don't sell one thing there, it's truly an amazing resource. And if you still don't believe me read what other members of this site have to say about it.

[toddp]

hi laniers,

that's for responding. I have read good things about the 30-day challege on these forums, and I'm in the process of wading through them. I'll give it some more time, and report back with what happens.

Thanks for your help!

[kingfu]

toddp

You've come across the same problem many of us who spend alot of adwords have. If you can't make a ROI on your product it either means your competitors have bigger margins than you do and can absorb the higher advertising costs (or perhaps the liftime value of the customer is worth more to them, perhaps they are upselling/cross selling) or they can't but they have no clue its actually costing them more than its earning.

I personally think with how high some of the CPC are that its the latter in alot of cases.

I wouldn't bother just trying to live off the scraps for narrow unused terms...you hear alot of people talk about it but its the minority who do well with that. 90% of us probably use the same search terms and broad keyword matchs pick loads of them up anyway.

Without knowing what your product it, i would suggest you either find away of differentiating it and charging a higher amount or find another product. Or try other advertising means. Natural search is still good, and i've got a few of my sites to #1 for good keywords...however its not particularly easy.

Good luck

[Mike Rhodes]

THE way to make AdWords work really well for you is ..... (coming in a moment :) )

But first...
What's the goal?
I'm guessing you're not selling a one-shot deal. This is a business (sorry, muse) not a promotion or a one-time sale right?

So what else does your business sell? What other products are those buyers of product #1 going to want? What other related products do they need? What will they buy before, during & after using your product?

It's all about the backend.

You probably will need to spend $0.20 x 100 to get that initial sale. But in most businesses they'd have to spend way more than $20 to make a sale :)
Online marketing is probably the cheapest direct marketing available to you.

The trick is to increase the value of each customer to you. Which in turn increases the value of each visitor to your site.

Some numbers please Mike to make this easy!

Right...
20c x 100 people for 1 sale = $20 spent & let's say $5 profit

Now, if you have a 2nd product that you can offer (also for $25) when they buy (an upsell on the order form perhaps) and let's say 20% take you up on the offer.

Now your average customer is worth (wait for it)
$5 x 5 (normal profit on 5 sales)
+
$25 x 1 (extra $25 profit on 1 in 5 sales. 20%. k?)

= $25 + 25 = $50 for 5 customers = $10 per customer

You've just doubled your profit per customer!

Now... take it one step further
you could offer a BIG upsell. Say a $297 product that 1 in 100 buys
or
My personal favourite
Offer a Continuity Program - in other words a monthly service of HUGE perceived value to your customers
Ideas include:
newsletter (printed & posted to them has great value)
audio CD
DVD
video on your site
a software product (that supports your initial product)
even just worksheets for people to track their progress
or group teleseminars (you can run them free on skype)

Now - here's the twist.
Offer this as a BONUS with the initial sale.
They get to try 1 month for free... and after that will be paying $17 or $29.99 or $47 (some charge $397) a month there after.

Now let's say that the average customer stays in your program just 4 months (1 free & 3 paid) which is pretty standard online...
of course the more value you givee, the better it works..

and let's assume you charge $27 a month

You're now making an extra $27 in sales (let's call it just $10 profit) per customer per month. Let's call it an extra $30 PER CUSTOMER!

So your profit went from $5 to $10 to $40.

Now you can afford to pay more for clicks.
You can bid more, get better positions, beat your competitors
Pay for additional advertising (on blogs, ezines etc)
Feed that profit back into improving the product even more

and on and on and on....

:)

Sorry - hope that ramble wasn't too long !!
PM if you want to chat about ideas for a continuity program in your market

Cheers,
Mike

[shultice24]

Don't forget about free traffic and advertising. If you have a quality site with links to some other sites and plenty of good content then you should get some free search engine traffic. Each search engine visitor that purchases drastically improves your overall rate of return.
As for free advertising, put your url in your signature on forums. Subscribe to social networks and use them to try and get some traffic that way. There are plenty of creative and free ways to get traffic. For example, in one of my upcoming muses, i'm thinking of taking a clip of my how-to video and putting it on youtube with a link to my site. Adwords might be the fastest and most straightforward, but you pay up.

[toddp]

thanks for all the feedback folks. Taking your suggestions into account, here are my next steps:

- follow the 30-day challenge, with the aim of learning some strategies to market my muse (and generate other ideas)

- test-market my existing muse, to get some practice and run the numbers;

- think about how to turn customers into repeats, weather by upselling or offering a subscription. My product is very much in the same vein as Tim's 'pxmethod' -- ie, a single info product offering targetted at a specific niche. But , I think there are ways to augment this, such as bulletin boards and the like.

- I agree that some SEO would help with the profitability, so I will consider what can be done to increase natural search traffic and convert those visitors as well.


thanks again for all the advice, keep it coming! I will check back again once I have a site running so you can critique. You've all been very helpful, I hope to return the favor by answering questions and posting on these boards.