Here's the step-by-step plan:
Boil your topic down to one word. Now we want to do some market research and assign some actual numbers to that word so we can compare your topics to each other and find out which ones hold the most promise for your first Internet business.
The goal of this exercise is to come up with a number that expresses the demand/profitability characteristics of the general market you are considering. This first number is going to express the amount of "demand" there is for the idea expressed by the word you picked. How do we assign this number? What if we can find out how many times a keyword has been searched on a major search engine in the prior month? Well; of course we can do just that. There are several PPC search engines that have keyword suggestion tools. These tools tell you how many times a particular word has been searched in the prior month. We will use Overture (perhaps the most popular) for our purposes. Here's how to get this number (if you get lost, it's possible that Overture has changed their site... if so, go and post to the coaching board and we'll update this step):
1. Open your web browser.
2. Enter the following on the URL bar (or just click the link below):
http://www.Overture.com
3. Click on "Advertiser Center"
4. Click on "Tools"
5. Click on "Term Suggestion Tool"
6. Enter your first topic.
7. It should give you a list of terms along with the number of searches. Find your term and write down the number of searches.
8. Repeat for each of your topics.
We'll call this the "demand" number. It represents how much interest there is in each topic on the Internet based on how many people search for that topic at several search engines which utilize Overture.
Next, we need to assign a number reflecting the profitability of your topics.
In the last step, we might have picked "joke" (the fifth most popular keyword search on the Internet at times). Most of us know that people searching for jokes aren't really interested in buying anything. We need another number to express the profitability of topics. Let's use Overture for this step too. Here are the steps:
1. Open your web browser.
2. Enter the following on the URL bar (or just click the link below):
http://www.Overture.com
3. Click on "Advertiser Center"
4. Click on "Tools"
5. Click on "View Bids Tool"
6. Enter your first topic in the box at the top. Fill in the box at the bottom with the letters/numbers in the image they are showing you. Click the Search button.
Now scroll down to the #10 listing and write down the bid for that listing. This represents the profitability number. At least 10 of your competitors think this word is worth more than that amount. If there is no #10 bid, I move right on. I try not to pay much attention to the bids above the #10 bid, because every market deserves to have 5-9 fools who are wasting their money because they see 5-9 other fools doing the same thing. Enough said.
Now you may be wondering about competition. Don't we want to have a number that represents competition? We actually don't care. If there are at least 10 bids on Overture, there is enough competition to make the topic viable using our plan. We don't care if there is "too much" competition in a market. Our plan is going to turn those competitors into our partners, so the more competitors... the better.
Now, just multiply the demand number by the profitability number.
No; this isn't a trick IRS form. By multiplying those two numbers together, you have come up with a new number that is completely meaningless all by itself, but it somehow encompasses all the important marketing information for your word. It has the demand and profitability indexes all rolled together in one number.
Compare the meaningless numbers and find meaning.
The numbers you came up with have no meaning by themselves, but you can use them to compare with other meaningless numbers derived in the same way. Now you can tell if "widgets" or "waggets" is a better market to tackle.
To be technical, you may want to take the square root of each number before comparing them. That way, a 400 really will mean that the size of the market is roughly 4 times bigger than a 100. This is necessary because we multiplied together two numbers that were really in the same domain.
That means they ended up being the square of the actual comparable numbers. To fix that, just take the square root. If you only want to compare the numbers to see which one is higher/lower than the other... there is no need to take the square root first.
The number does a lot more that it may appear to do on the surface. You will find that it predicts the ease you can find free content for your site, engage in link exchanges, find topical ezines and discussion lists, etc... All while balancing that with the ability to find profitable affiliate relationships, sell advertising, find complementary products, etc.