The Web is a big place, and while it can technically never get “full”, the playing field now feels smaller than it did a few years ago. There are literally millions of businesses and individuals selling products and services online, and competition can be extremely fierce in some markets.

For this reason, spending a little time on niche research is crucial when starting an online business.

While a true abundance mindset rejects the idea of competition and realizes there is more than enough for everyone, it still makes sense to avoid jumping into the fray with thousands of sites that are selling almost identical products to the ones you are offering. You can make a lot more money with much less effort by narrowing your focus to a niche market.

The term “niche marketing” gets used a lot online, but most of the time it’s not used correctly. A niche, in terms of marketing, is a relatively small group of customers who have very specific interests and/or needs.

Targeting a niche makes it easier for you to create profits for a couple of reasons:

1. You are marketing to a group of people with very specific needs. In many cases these folks actively want the solution you are offering.

2. There is almost always less (even minimal) competition when you are targeting a niche because few online businesses will take the time to research these smaller market segments. Most marketers go for the broad markets, leaving many lucrative niches pretty much untapped.

It should be pretty clear how your business could benefit from focusing on niche marketing. But what is less obvious for many entrepreneurs is how to do this; i.e. many people confuse the concept of a niche with that of a specific market.

Here’s what I mean:

When asked to list a few niches, many people would come up with answers such as horse training, weight loss, and home improvement. These are sincere responses, but they are not niche markets by any stretch of the imagination.

Each of the above markets is very broadly defined. To find a niche, one must more narrowly refine his or her search into a broad market.

On this premise, horse-training equipment for left-handed children might be a niche worth exploring.

As would safe weight loss strategies for men over 40 who are recovering from alcoholism.

By the same token, another possible niche market would be adding bay windows to second story rooms to enhance both interior lighting and equity value.

Are you beginning to see the difference in a broad market and a tightly focused niche? The examples above are totally made up off the cuff, and may or may not be profitable; but hopefully you see the point I’ve used them to illustrate.

While a broad market may have millions of consumers, it also probably has at least tens of thousands of qualified businesses working hard to sell to these prospects. On the other hand, a good niche with only a few thousand customers may have just one or two merchants currently catering to their needs.

As an online marketer you could earn a substantial living with a few hundred core customers. And if you are among the first to discover the potential of a certain niche, you can position yourself very strongly in the eyes of your target prospects and generate sales without a lot of hard work.

It only takes a little research to find a good niche. By spending a few hours of your time looking for a very focused group of consumers you could literally set yourself up for massive success on a long-term basis.

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The term “niche site” can mean different things to different people. For purposes of this article I’m actually referring to content sites or authority sites.

To be even more clear: I’m talking about blogs and sites that are built to publish content on a very specific topic. These sites are typically monetized via contextual ad networks like Google Adsense, and through affiliate programs like Commission Junction and ClickBank.

First of all I want to be crystal clear: I advocate publishing ONLY quality sites to the Web. I feel obligated to be sure all my sites are of a real benefit to searchers who find them, and I do not endorse or participate in the creation/promotion of garbage or throw away sites that have no good content and exist only to garner a few random ad clicks.

There is already enough junk online. Let’s not waste a searcher’s time by giving them another page full of nothing but ad links with no real answers to their questions.

While some sites can generate substantial revenue using only contextual ads and affiliate links, the majority of niche publishing sites only produce a few bucks per day. This hardly seems worth anyone’s time, especially in the Internet marketing niche where so many people seem to be behind on the water bill and desparate for “emergency money”.

It’s true that niche publishing is probably not a good way to pay this month’s rent. People in this kind of trouble need to find a job or figure out a way to sell something for direct profit quickly.

However, when one changes the focus from fast cash to a long-term “investment” mindset a network of small niche sites each earning a few bucks per day has a completely new appeal. Every one needs some program for saving money and investing for the future.

Even those who think they are “too broke to save” should wake up quickly and realize the basis of good money management is the ability to put back even a few bucks each day. Small effort builds on itself and soon becomes a good chunk of cash.

In the world of mutual funds and savings accounts, how many average savers see a monthly return of $100 or more in their first year? I’m talking about the guys and gals who can afford to put $50 to $100 per month into a good mutual fund here. It takes a while to build momentum at that rate, but have a look at what just 5 or 6 well-built niche sites can produce in a month.

These sites cost next to nothing to produce. A $10 domain and hosting; and if you use a reseller hosting plan you can host unlimited sites at $30 per month. It doesn’t take long to get into profit here.

So imagine you have just 5 sites, each earning $2 to $4 per day. You can select your choice of currency to be paid in and you can have your monthly earnings wired into just about any type of account you like. This money adds up fast at the end of the month and can be easily transferred into a savings program like a mutual fund, silver rounds, or whatever.

I’m not a financial consultant. But I see a lot of people online who are desparate for cash. People who manage their funds well don’t tend to find themselves screwed on the rent on a regular basis, and I’m not judging because rewind a few years and I was horrible with my money as well.

It seems clear to me that niche publishing is an incredible way to set up passive income for savings and investment. Sicne the money is only paid out on a monthly basis for contextual publishing and many affiliate networks a person can avoid ever laying hands on it and placing it directly into an appropriate account.

Essentially you’ll never miss the money because you never really see it. And in just one year you’ll be well on your way to a good nest egg.

Think of what three to five years of this simple strategy could do in terms of building an awesome savings?

And imagine what 10 to 20 years of this strategy would do, especially assuming you’ll learn as you go and be able to create more money per site. While other people are investing in real estate to earn passive income and equity you can be spending ten bucks a pop to create passive income machines and converting the earnings into whatever cash flow/savings strategy you like.

The core of what I’m saying is not what you do with the money really, it’s about changing from the “need money now” to “what if I build this passive income and invest it” mindset.

The Internet Gold Rush Is Over…

But you can still make a great living online if you know how to target tight niches. This is the real key to prosperity as an Internet marketer.

And if that’s true why should you even bother with an Internet marketing business? Why not just log off now and turn on the T.V.?

I admit it: there’s more to the story than what I’ve told you up to this point.

Yes the “gold rush” period is over. But there’s still more than enough room for you and thousands of other people to make a fortune online.

It’s just that today’s Internet marketplace requires a slightly different approach. What worked in 2001 just won’t cut it today. It’s a matter of either learning what it takes to thrive in the face of massive competition or making the mistake of jumping right into the free-for-all and getting pummeled.

The reason so many Internet marketers fall flat on their face and then tell the world that “online marketing is a scam” is simple: They try to penetrate a market that is beyond saturated. They aren’t able to compete with the thousands of other desperate marketers who are battling tooth and nail for position.

The result, of course, is failure to make their first dollar and extreme disappointment. But they didn’t have the advantage that you have.

It’s all about understanding niches.

The word “niche” sure gets kicked around a lot these days. But few people actually understand what it means.

There’s a big difference between a market and a niche. Failing to understand this difference can result in time wasted, money lost, and possibly even a good “crying jag” as our friends in the UK would say.

I wrote a good article about niche marketing recently. Check it out here.