I spend a lot of time hunting for profitable niches and setting up content sites based on my findings - these content sites bring me a handsome chunk of passive income every month.
My technique is pretty simple, I find the niche and then I use Google's external keyword tool / Micro Niche Finder and/or Market Samurai to weed out the best key phrases.
A profitable niche is usually where your visitors would be in shopping mode as opposed to researching mode. So a site on GPS units would probably do better than a site about a celebrity. The word probably is of course important here as it might be super hard to get 10 visitors a day for your GPS site while you might have thousands every day looking for boob shots of Angelina Jolie. The GPS site would be easier to monetize and more profitable per visitor though.
Where to Find Hot Niches?
Good places to look for hot niches would be for example Ebay Pulse, Buy.com's What's Shaking and Price Grabber's Most Popular page.
A really cool feature for us profit hunters on buy.com is: Coming Soon - Buy.com
It shows you what people are PRE-ORDERING, anything good enough to pre-order will certainly be super hot niche once it gets released. They got other categories than games for pre-ordering, so look around.
Every time I see a product that might be good, I run it through Micro Niche Finder, I filter out the results and check the SOC (Strength of competition). I look for keyphrases with SOC lower than 5, searches per month above 500 and competition (Exact Phrase Count) under 10,000.
Content is Still King
Once I got that I set up a WP blog and order 50-100 articles from my content store based on my keyword research. I never go for smaller amounts of articles on a site than 50, I believe in volume and it is easier to position yourself high with a lot of unique content on the topic. Also I like checking my stats and see you had 10,742 visitors who found you from 8,967 different key phrases. If a site shows potential and starts to making money, it will get a more content - somewhere around 1-3 articles per week depending on traffic/income of the site.
I am currently developing a plugin for FrontpageContent that will make content publishing to WP blogs automatic, that is going to save me heaps of time when done.
Sometimes you strike gold and make one of these 50 article / $25 a day sites and other times you can hardly get this brand-spanking new 50 page website to make $0.10 a day. But again, I go with volume and my chances are much better because of all the long tail keyphrase traffic that will come naturally by owning more of cyberspace.
Show Me the Money
Ok, now I got a niche, I got the blog up and the vast amount of content makes sure I have a ton of long tail traffic coming in...
I am probably going to catch some flack for this, but I have basically totally abandoned affiliate programs and I am using Adsense for monetization only on these sites...
I have done this because I got tired of watching 10+ different programs slowly move up to a level where their way too high fee's for payout could be justified. I would not wanna pay CJ or Shareasale $45 or whatever they charge to get $100 right? And for some reason they refuse to add cheaper / better ways to transfer money to their affiliates - PayPal could be done cheaper for example.
I recently invested in John Reese's Traffic Secrets 2.0 - maybe that course will change some of my ways, I doubt I will move on from my current practices completely though - it simply makes too much money
Happy niche hunting,