What criteria do you look at when deciding what type of forum you should start? I’m sure you’ve heard many other people recommend that you should start a forum based on a topic that interests you. The logic if obvious, if you don’t really care about the forum topic(s) than how can you set about creating a successful forum? I agree with this reasoning and even wrote about this a while ago. However, what can you do when the topic that interests you is not a profitable niche?
How I Chose My Niche
As some of you may already know by reading my story about getting started earning money on the internet, I run several video game related forums. I’ve always had a passion for video games and have even played Halo on the professional level. I also sell Halo lessons through my blog (in need of a serious redesign) over at thehalogod.com. In fact, I was even fortunate enough to use the success of my Halo videos to help launch a couple game related forums. However, as I look at the forums I’ve created I can’t help but think about the profitability of the niche I’ve chosen to target on the web.
The Low Profit Niche
I’ve focused most of my web properties around video games and in one circumstance - a single video game franchise i.e. Halo Boards. The question I now ask myself - that I should have done long ago - is how can I really make good money from these video game focused forums? Now I’m not just in it for the money and in fact if my revenue ever grew a substantial amount I would sponsor bigger events, provide giveaways, make improvements to the forum, and the list goes on. However, how can you really expect to make money off of advertising when nearly all of the active members and even the guests that find the site through search engines or other websites already own the video game system and games that most of the conversations center around (as in the case of Halo Boards)? The answer is simple - it’s extremely difficult. Even if the members of the website do click ads you have to remember these ads are still focused on video games which are frequently low paying.
Now the reason why these keywords don’t pay out well is because quite simply the ads that are displayed are for inexpensive items. When you see ads to buy third party game controllers, new video games and xbox live subscription cards you know that because these items hover around $50 there is not a lot of money to be earned with each sale. The advertiser can only make money if the cost of advertising is low enough that the conversions outweigh the cost of the ads. So to even make a decent sum of money you’ll need a lot of clicks.
The High Profit Niche
Now lets look at another example. Let’s say you run a forum focused on HDTV’s and the discussion of new HDTV’s, reviews and anything else related to this “new” technology. Immediately you know that a significant portion of the members on the forum are there to buy a new HDTV and are using your forum as a resource to help make an informed decision. And because of the nature of the forum members that are gathering more info to make a purchase, if they do click an advertisement they’re more likely to buy. This will help prevent your Adsense account from being smart priced but that’s a conversation for another day.
The cost of an HDTV can range from several hundred dollars to several thousand dollars. As you can see the products that will display in the advertisements on the HDTV forum example are much more expensive than those being displayed in the low paying niche. Naturally, because the products are so much more expensive advertisers have to pay much more for their ads ad clicks. With one low paying niche forum you could make a couple hundred dollars a month and on the other high paying niche forum you could make a couple thousand dollars a month with the same traffic level and activity. So before you launch your next forum make sure that you are not only interested in the topic but you also ask yourself, “How much money is there in this this niche?”
Lessons Learned
I’m not going to look back and view the decisions I made as a mistake, because starting those forums is what got me into earning money on the web in the first place. I also had a lot of fun doing it, but now that I’ve learned some lessons I’m certainly going to do more extensive research to determine how profitable the niche is.
Have you ever made this “mistake” before? What factors help you determine which new websites and forums to run with?
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