I often get this question, how do you determine whether a niche is worth entering. So I'll outline what I do to determine that.
The preliminary step is keyword research. There's books and books on that, I won't go into it. I use keyword spy, google cash detective, and similar tools that automate the process.
The part thats interesting for this discussion is not finding the keywords but figuring out how competitive they are. Single word keywords are a bit harder to size up than multi-word keywords with my method, so I'll cover single word keywords another time, because it requires some enhancements to the basic method.
So lets say you want to know how competitive 'build backlinks' is.
Phase 1: competition
Step 1: enter build backlinks into google and see there are 1.8m matches.
Step 2: enter "build backlinks" and see there are 180K matches.
Step 3: enter intitle:"build backlinks" and see there are 2140 matches.
Step 4: enter inurl:"build backlinks" see 2090 matches.
Step 5: enter allinurl:"build backlinks" see 2090 matches.
I abandon a keyword if it has >4K intitle: and/or >4K inurl: matches as that indicates many pages are optimized for this 2 word keyword. The longer the keyword, the lower my cut-off goes.
Phase 2: competition strength
For each of the top five (sometimes ten) results on the result page of the broad match search, determine how many backlinks each has, and eyeball whether they're actually optimized for this keyword. If the keyword is not dominant in their backlinks then they are ranking mainly due to on-page SEO, and they're a lot weaker irrespective of the number of backlinks.
I use http://backlinkwatch.com to examine the backlinks, some other people recommend Yahoo Site Explorer. It's a matter of taste, both have their plusses and minuses. I use Firefox SEO to deterimen page PR.
For this keyword, I find:
http://www.webconfs.com/how-to-build...article-16.php 118 links, 20% with anchortext 'how to build backlinks'
http://www.sitepronews.com/archives/2008/jul/2.html 10 links, 20% with same anchortext
http://www.seochat.com/c/a/Link-Trad...Your-Web-Site/ 8 links, none with *any* anchor text
http://www.work-at-home-jobs-iowa.co...-to-build.html 5 links, no anchor text
OK we've seen enough to determine that this niche is probably possible to dominate with a few well written pages and >100 links with appropriate anchortext. The amount of effort required is (a) getting a good domain, (b) writing a few (>5, ideally 10) pages with good content about backlink building (c) building backlinks to them with >40-50% anchortext containing the keyword 'build backlinks'.




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