Consolidation vs Niche Targeting: Pros and Cons

I’m currently in a conundrum, so I’m going to think aloud for this post.

The problem is one of Generic vs Niche targeting - especially with regards to consolidating a number of niche sites into a larger generic one.

If you have multiple sites in the same generic vertical covering different niche elements, should you consolidate them into a single super generic site, or remain focused on targeting niche markets?

I have a number of small financial news sites. Each covers a very different niche, and I’ve seen the most niche sites perform most exceptionally. They are simply better targeted to their individual niche audiences, and recognised as such.

However, I’ve been developing a number of small technology sites across different niches. I’m now wrestling over the question of whether they will work better consolidated as a single generic site, or better as niche targeted sites.

From what I can see, both strategies have their own advantages and disadvantages, which need to be carefully considered in making core tactical decisions:

1. Consolidation

Pros:

1. Consolidation allows you to supercharge a domain with greater authority, allowing better leverage of search visibility for your content and push traffic

2. Consolidation allows you to work on a single brand and attempt to carve out marketshare and mindshare among internet users

3. Traffic & branding allows for potentially higher revenues via basic advertising schemes such as Adsense, and raises the bar on revenue generation potential via direct advertising agreements

4. Generic sites have much larger traffic potential, because you can appeal to so many more different people

5. A generic site can adapt better to changing conditions - if one area of interest starts to fade, you can quickly adapt coverage of other topics areas of interest at will

6. A generic site could become a far more valuable asset for resale, precisely because it will have more coverage and greater monetisation potential for new investors than much more niche sites

7. A generic site offers easier revenue generation options - for example, direct and indirect advertising options, ecommerce development, affiliate schemes and co-branding lead generation, etc

8. If a generic site can prove especially strong on coverage of a particular niche topic area, any conferred authority can be leveraged across the site’s other topic areas

9. Generic sites can strategise much better for the long-term, and are unlikely to fade in the short-term so long as you can invest in them

Cons

1. Generic markets are always much harder to gain a market/mindshare presence in and take much more effort for visibility

2. Consolidation means general audience targeting vs specific audience targeting, which can leave your site more accessible but less useful for the very people you want to attract most

3. A direct advertiser strategy may fail on generic sites, precisely because it isn’t so well targeted

4. A direct advertiser strategy can leave your revenue generation dependent on a smaller number of actual advertisers, and therefore invite more risk

5. Traffic potential may be great, but so is the competition, so a moderate generic site may not generate much more traffic than a good niche player

6. Generic verticals always experience the greatest competition, and will often leave you pitted against companies will millions of pounds they can leverage against you

2. Niche targeting

Pros:

1. Niche targeting allows the ability to focus more on the needs of the individual visitor looking for information in that niche

2. Niche targeting offers better coverage potential from other players in that niche, especially if you provide an information site that others can feel comfortable linking to and referencing

3. Working on multiple niches spreads the business risks, not least in potentially being able to attract a larger number of smaller paying direct advertiser base, and thus minimising risk to income

4. Niche sites may be more attractive to direct advertisers because the site is so much better targeted to that audience, plus cheaper than advertising on generic sites

5. If you sell direct advertising on multiple sites as a package, it could be more lucrative than as a single site, especially for SEO purposes where you can offer different IP ranges and thus make link sales more attractive

6. It’s easier to claim marketshare in a niche market and develop strong traffic on your niche presence

7. Some niches remain under-monetised, with many players unaware of basic internet marketing strategies such as SEO, allowing you greater room to grow and establish market presence

8. It can be much easier to generate revenues via Adsense precisely because there is less competition and it’s easier to create a market presence

9. If you can target a niche emergent market, or otherwise exploit conditions of low competition, you can develop a very strong market presence

10. Because of the lower investment costs, niche sites offer a better ROI if you can develop marketshare

Cons:

1. Niche markets invariably have a smaller number of available advertisers per niche - it may be difficult to fill advertising inventory for a particular niche

2. Niche sites have smaller overall traffic generation potential by default of being only able to attract a small interest audience

3. Niche markets, because of their degree of specialisation, are more vulnerable to market changes that could make their lifespan relatively short-term

4. You can only develop significant marketshare in a niche so long as the big players stay out - once the big boys decide they want a share of that niche, expect to see yourself pushed out to some degree.

Conclusion

I’m glad I’ve spent the morning brainstorming the pros and cons of consolidation vs niche targeting.

So far my the following are suggested:

1. Consolidation: As a strategy offers very good revenue and asset growth potential - but generic markets also require a much larger investment to develop traffic. Good option for when you have serious money to invest.

2. Nich targeting: As a strategy offers potentially higher returns on investment, but also invites larger risks. A better option for when your investment funding is relatively low.

And in conclusion?

I’ve made my decision - I’m going to push on niche targeting in the technology sector because I simply don’t have the funds to compete directly with the raft of bigger generic tech information sites out there.

I’ve already been able to start developing some degree of marketshare in the niches I’m targeting.

However, if I find the niche sites look like they are getting squeezed, I can consider consolidating them into a single larger site - leveraging any authority gained across different niche sectors into a single point of authority, and thus allowing a stronger foundation from which to enter more generic marketplaces with lower investment risks.

Anyway, I hope you had as much fun following that as I did. ;)