There’s a lot of confusion around about what KEI is, even though when you boil it down, it’s actually pretty simple.

When we do keyword research, we know that we’re supposed to be mentally balancing the amount of traffic a keyword gets with how competitive it is to rank for that keyword.  A term does us no good if we can’t rank for it, obviously.  But, by the same token, it’s pretty pointless to rank for a term that receives almost no traffic.  So there needs to be a balance struck between the two.

Keyword Effectiveness Index, or KEI for short, is a mathematical formula quantifies that balance in a numerical way.

The formula balances the amount of monthly searches for a term (represented by P for Popularity) and the amount of results returned for the term (represented by C for competitiveness).

Here is the formula for KEI:

KEI = P^2/C

Of course, KEI is merely one factor to consider when deciding whether to attempt to rank for a particular term, but it is the generally accepted wisdom that any KEI score above 40 indicates that a term would be effective.

I hope this explanation of KEI has cleared things up!

*melanie

PS – I’d love it if you signed up for NicheChick below – every day you’ll get a brand new niche idea, complete with keyword research that includes KEI!  It also includes monthly searches, and results returned when searching two ways (allintitle and “quotes) – not to mention estimated Cost Per Click!  This makes it a winner for people who develop content sites that they monetize with Adsense.   But if affiliate marketing is your thing, we gotcha covered there, too.   You will also receive a suggested affiliate program to promote, AND links to four different related and active web communities – a forum, a Google group, a Yahoo group, and a Myspace group.

I’m so glad you’ve decided to be a part NicheChick!

One of the most often asked questions by internet marketers, both new and experienced, is – “How do I find new niche markets?” There is much written about online places to locate new hot markets – Google Trend, Amazon and eBay hot items, Froogle, etc. However, although these online techniques can reveal amazing niches, they are not how I have found ANY of my most profitable niches.

Here’s how I DID find them. I paid attention to the life going on around me.

Let me explain. What is a “niche market” anyway? It’s a group of people who are interested in a certain thing and who search it out on Google. I think the key part of that sentence is “group of people.” Marketers often focus on the “numbers” of a niche and ignore the people factor. When you look at the number of searches a keyword gets per month, I think it’s important to keep in mind that each of those numbers each represent a real person who sits down at their computer, is curious about something, and types it into Google, looking for information.

Since niche markets are composed of real people living their everyday lives, it stands to reason that you can glean some great niches from real people and real (non-internet) things that you see everyday. Here are five of my favorites:

1) Magazines - Magazines have their finger on the pulse of what their target market is currently interested in, and what they are becoming interested in. If you see a group of articles, or even one interesting article, that catches your eye in a magazine, chances are there’s a market for that subject. Magazines would go out of print if they didn’t consistently put out articles that appealed to their target market.

2) Newspapers – For more timely and up and coming niches, turn to newspapers. Newspapers have their finger on the pulse of what, not just a particular niche demographic is interested in, but the whole world! New breakthroughs, entertainment new, technological advances, as well as interesting cultural happenings will all be reported through newspapers. There are niches to be mined there.

3) Movies – Many niches relate to interests and hobbies. Pay attention to unusual interests, job, or hobbies that characters have in movies. Pay attention when they talk to one another. If something has been included in a movie or a television show, chances are it is because it resonates with a large enough segment of the population to be interesting.

4) Conversations - When you talk to the people in your life, listen to what they talk about with a marketer’s ear.  Are they thinking of moving to a new city?  Did they just get a dog?  Do they have a medical issue they’ve been searching for answers about?  Are they trying to solve a problem with their finances or around the house?  If they are, chances are good that others are trying to solve the same problem.

5) JUST ASK! – If all else fails, strike up conversations with brand new people that you meet – at the coffee shop, in the grocery store, in line at the post office!  Ask people about their lives and their interests.  You would be surprised how eager people are to talk about themselves and their passions.

It’s a good idea to carry around a pocket notebook and a pen around with you to jot down all of the new ideas that will be flooding into your brain so that you can do specific keyword research later!

Here’s a fun challenge – do this for a few days and post in the comments how many new niches you were able to come up with!  I bet it will be more than you think!

*melanie