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Selecting a niche to promote is the first challenge in building an Affiliate Marketing business. It should be easy to find a market that you're interested in or you're familiar with. Yes, it's easy but it's incomplete, because the real challenge is to find a profitable niche.

What is a profitable niche? It is a market defined by high demand and low competition. To find the niche that makes your affiliate business profitable, you have to find a market with hungry buyers and with few competitors for your affiliate offers.
How to find that niche? This process requires two steps. The first step is a brainstorming session. Make a list as big as you can of the markets you think might be profitable, or that you're just interested in promoting. You may find ideas for this list by visiting forums and blogs, by browsing bookstores, from article directories and social bookmarking sites and so on.

The second step is the process of thorough evaluation of the markets that look promising, by checking out their potential profitability. There are many ways to do it. One way to verify if people are interested in a particular niche is studying online communities like discussion groups, Q&A sites and social networks.

Another way to find out if people are buying products related to a niche is analyzing PPC advertising, eBay, bookstores and magazines. A very helpful task is running a research for keywords using Google Keyword Tool.

Choosing your affiliate niche is crucial for the affiliate marketing process. No website or marketing strategy can help if you've picked the wrong market. You will start with one niche, but as time goes on, you may choose more niches and earn more profit.
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