Advertising Online: Focus on Niche Markets

Updated June 10, 2008

One mistake many new online businesses make is to open shop without a clearly defined product or a sharply defined target market to advertise to - or they expand too quickly beyond an original core product or service, and therefore wasting advertising budget. Some businesses try to be everything to everyone and, in doing so, water-down a strong niche formula or blur a potentially unique online identity. Amazon.com is perhaps the most salient example of an Internet pure-play trying to transform itself from a bookseller into a 'one-stop' general-merchandise monolith (with predictably uneven results).

By now it's an ecommerce cliché: focusing on a distinct, well-defined niche market is a powerful key to online success. Maintaining a strong niche means that you have more than a just recognizable brand. It means that you have a solid specialty product that's differentiated from the get go - one that clearly distinguishes you from any broad competition you may have. In fact, a unique niche (in it's most ideal state) already forecloses the possibility of 'commodity competition' and provides your online business with an exclusive, clearly- defined market.

For example, e-bookstores are a dime-a-dozen on the Internet - many of which are leveraged by offline brands or, as in the case of Amazon.com, already dominate a major online consumer share. Books are commodities and competition is fierce. However, focusing on a niche means you isolate and spotlight a single book category - a specialized discipline - and perfectly exploit the exclusivity and uniqueness of that vertical market.

What happens when you move into a niche market and specialize? First, you immediately turn a commodity into an oddity - a unique, differentiated product with a defined target demographic. Instead of just 'books', you now become the online authority for, say, 'philosophy books' - with a defined audience and a crystal clear bead on where that audience congregates (philosophy news groups, academic portals, university-related forums, philosophy-related zines, content sites, newsletters, and so forth). Also, you are now a purveyor of rare or specialty products that may be difficult to locate offline through traditional brick-and-mortar outlets.

Equally important, operating in niche markets means you can enjoy non-price forms of competition. With a specialized product and brand, your broad-spectrum competition is no longer directly competing for your target market - and having 'the lowest price' is less of an issue. Besides understanding what makes your customers tick (because you know exactly who they are, what they want, and how they communicate), you can market to them accurately and cost-effectively - and you won't have to experiment with penetration pricing formulas to compete with the vast hordes of other general, commodity booksellers.

That's because you have Nietzsche in your niche - as well as hundreds of other in-demand authors that your target audience want in their collections. Regardless of whatever marketing technique you employ, you've already leveraged your opportunities for generating meaningful traffic by narrowing in on a qualitatively distinct audience with predictable consumer needs.

For example, keyword strategy is liberated from wide-angle, catchall terminology and (resultant) poor search rankings. In a niche, you can achieve high search rankings simply by optimizing tags and content with the niche keywords unique to your inventory and business model. All niche markets necessarily come with a corresponding set of uncommon niche keywords - and with your keyword competition greatly reduced, your customers will have no difficulty finding you at the top of search queries.

Needless to say, Hegel and Kant won't sell as many books as Clansey or King. The bottom line question is this: can your business sell more by specializing, differentiating, and locking onto various niche markets? Here, concentrating too closely on an isolated niche can be a liability if the market for your product is quite small or there is little online demand for such a limited item. But this is what a business plan and market analysis is for.

Finally, once you have discovered a lucrative niche market, you can build around a core product vertically - and enhance overall value - without attenuating your brand magnetism. For example, you now can develop your own line of philosophy accessories: a 'great philosophers' coffee-mug collection or maybe even inflatable bounce-back philosophers you can throw punches at. Who knows - the creative possibilities become endless...

The point is, there are plenty of online businesses out there trying to wear too many hats, trying to be everything to everyone. The possible results: increased competition, painful price-based differentiation strategies, decreased brand visibility, and inefficient marketing tactics. In niche markets, it's certainly true that there is much less universal demand for a specialty product. But you can still make a fortune meeting a specialized need - with better odds for success.