Step 03 - Choose a profitable niche

Do some research on Google AdWords and Wordtracker to choose the most profitable niche from among the ones you've chosen. Because you're planning to use AdSense, you want valuable keywords or key phrases, if possible ones that people are paying at least 50 cents per click for on Yahoo! Search Marketing and AdWords.

You're going to build a site the search engines love, so you also want to find key phrases that many people are typing into search engines. You don't rely on guesswork.

You must do this BEFORE you start building your web site. That's critically important.

Here's a useful free tool most using for quick, rough keyword research: pixelfast.com/overture/

Type in a phrase, for example, "hiking boots", click "Go", follow the instructions, and you can see how much advertisers are paying per click for that phrase on the Yahoo! Search Marketing (formerly Overture) network of web sites.

You can also see how many people searched for the phrase the previous month. For a number of reasons, this figure is often unreliable and can be grossly exaggerated. That's why I double check results using Wordtracker.

Wordtracker's free trial is fairly limited. Fortunately, they allow you to subscribe cheaply for a day or a week at a time. It's very fast, so you can do an awful lot of keyword research in a day. I use the annual subscription now.

Go to Google's AdWords and find out how much advertisers are willing to pay for the keywords or key phrases you're interested in. You can do that by playing around with Google's free Keyword Tool.

For example, try putting in a keyword or phrase, such as "recipe" and click on "Get More Keywords". Pretend you're willing to pay the maximum per click the tool allows - 100. (It won't work properly if you ignore this.) Over on the right side of the page, make sure that "Cost and position estimates" is selected.

The tool will calculate for you the estimated average CPC (cost per click) for a whole lot of words and phrases. Try entering a different word, say "debt" or "hosting", click on "Re-calculate" and watch how the CPC changes.

You don't HAVE to choose a topic which has expensive keywords. Often topics that have expensive keywords are very competitive. You may do better choosing a less competitive niche with cheaper keywords.

If you use Site Build It you'll find the brainstorming tool in it awesome to help you come up with ideas and phrases you wouldn't have thought of without it.

Beware: If you choose certain topics, Google will not allow you to place AdSense ads on your site and you'll miss out on a very lucrative opportunity.

Such topics include gambling, firearms, ammunition, balisongs, butterfly knives, and brass knuckles; beer or alcohol; tobacco or tobacco-related products; and prescription drugs.

For a full list of topics you may wish to avoid see: https://www.google.com/adsense/policies?hl=en_US

Publishers can choose to have their ads displayed only on Google or also on a large network of sites. Will AdSense ads you see on Google appear your pages? To get an idea, find web pages that have material similar to the content you're planning to create and look at their AdSense ads. You can also use AdSense's preview tool to see which ads are being displayed to people in different countries.