When investigating starting a business on the Internet, the
advice you'll very frequently get is to build a business in a
very targeted niche.  You'll even be advised to find a niche
within a niche in some cases.

By focusing on a very tight niche, and offering only
products, services, and information within that niche, the
market naturally gravitates to you.  The world will begin
recognizing you as the expert.

When someone is searching for information on that topic
in the search engines, since your site is so focused, it
naturally ranks higher.  Since you've spent a lot of time
really researching the topic and related keywords, you
should naturally perform better in the pay-per-click search
engines too.  Your focus will enable you to uncover
advantages that others miss.

As you initially choose a niche and begin to do your
research, you may notice that there are already a LOT of
people in that niche. There are already a lot of established
competitors. So you begin to doubt whether or not to get
into that market.  How can you be sure that you're not
wasting your time by getting into an already saturated
market?

My rather bold statement to clients who ask me this
questions is that as long as you differentiate yourself
sufficiently, you have NO competition.

If you enter a  market where there are already a lot of
sellers, that's a good sign. It means that people are
interested in that product category.

If you check at the pay-per-clicks and there are already
500 bidders, that's a good sign. Usually, that means that
the demand is so high that it attracted all of those
bidders.

Your challenge, again, become to find a unique, unfilled
need in that crowded market and fill it. How do you do
this?  You begin with research. Keyword research is the
easiest way to do it.


Here's how I begin, and how I often have clients begin...
Brainstorm, every term that you can think of related to
your anticipated niche. Then use a keyword research tool
to look for related terms.  As you compile a list of more
and more terms related to your topic, you're doing two
things. You're searching for an under-served segment, and
you're looking for terms that you'll target in your search
engine marketing efforts later.

Absolutely the best tool that I've found for assessing the
competition in a given niche is a piece of software called
Ad Word Analyzer.  With this tool you enter a single word
or phrase. The software then queries the Overture
(pay-per-click) search engine database. It finds all of the
related terms that people did searches on in the past
month.

Next, Ad Word Analyzer queries both the Google
AdWords and Overture databases to see how many
pay-per-click campaigns are already active. This gives
you a very powerful snapshot of:

 - How many searches were done for each term last month
 - How many webpages there are targeting each term
 - The ratio of searches to webpages targeting the searched
   term
 - How many pay-per-click campaigns there are at Overture
   targeting a term
 - How many pay-per-click campaigns there are at Google
   AdWords targeting a term


That is very powerful information! If you see that a lot of
people are searching on a term for example, but that there
aren't many merchants targeting this market, it may be a
good market for you. It may also not be a good market. It
is entirely possible that the reason no one is targeting the
market is because people interested in that topic are
largely unwilling to spend money on things pertaining to
the topic.


So a good place to start is with Ad Word Analyzer.  It was
created by my friend, and fellow Floridian, Jeff Alderson.
You can get a copy of this essential tool at:
http://TheRealSecrets.com/adword-analyzer.html

This is the place to start in researching your market. Your
focus should be on doing keyword research and spending
a LOT of time investigating the market before you start
building a website or promoting a product.

Marty Foley and I have done two recent tele-seminars
centered around  choosing keywords, using pay-per-clicks,
generating traffic, and increasing website conversions.
Altogether these two tele-seminars are more than 4 hour of
discussion and insights into building a finely-tuned
marketing machine. I encourage you to check these out.
You can grab both transcripts at:
http://MasterThePayPerClicks.com

Getting back to the very basic question of when is a market
overcrowded - it's overcrowded when you can't make a
satisfactory return on investment in that niche. What you
consider a satisfactory ROI is a personal judgement. It
depends upon what you could get if you invested your
resources in an alternative investment.

Frank, I don't see why you'd want to enter an arena where
the  competition is already very fierce... such as Internet
Marketing. I've already shared with you (in earlier articles)
that there are  people quietly making six or even
seven-figure incomes off in fairly obscure niches.  My friend
John Evans wrote about nine such people in his book
Success Alert.  This book is required reading for anyone I
mentor or coach and is available at: 
http://Success-Alert.com


One final opinion on over-crowded niches.... Many people
get excited about a potential product until they start their
research. Then when they see that there IS competition,
they use that as an excuse not to go through with the project.
They then move on to another potential niche, and repeat the
process. After they've checked out 20 different niches, and
concluded that they're all too competitive, it's really time for
them to take a serious look at their thought process.

Hopefully you do thorough research, but don't let a little
competition stop you from entering a market. If there is no
competition in a market, it's often because others have already
investigated that niche and determined it to be a total waste of
time.  Sometimes it's good to follow the crowd... Just figure out
a way to stand out in that crowd.