Firstly lets understand what a niche market is, it is a group of people with a common need or problem who are looking for providers of the right products. A niche market is often a subset of a larger market, owners of Bengal cats rather than cat owners for example. This makes it much easier to target the group as they have more specific needs.

Ideas can be found simply by looking through magazines and watching for ads that seem to be repeated time and time again. An advertiser is hardly likely to keep spending on unprofitable campaigns so these repeat ads indicate good markets. Now you just need to find an affiliate program that also serves the same market.

Most new affiliates start with something they are familiar with or already have an interest in which is good in that they can find things to say about the subject, they understand the needs and attractions in the market and they also reduce the amount of new information they have to take onboard while learning the marketing side of things. This is a great way to get started but perhaps a little limiting for those who want to diversify their marketing.

One free way to uncover niche ideas is to go to an online directory like DMOZ and start by entering a broad term then explore down the branches of results. You can also use tools like wordtracker and the excellent seobook keyword tool for drilling down from broad terms to more niche ones.

You can even use tools like that to find solution seekers - try using words like fix, problem or cure as your root search and see what niche ideas you can find. Those folk are clearly looking for answers, can you give them the answers to their problems with an affiliate program?

Using a keyword tool also helps reveal whether the niche is actually profitable or not, obviously we won't waste our energy on unprofitable markets though we must remember that seemingly unprofitable niche markets can sometimes be made into more profitable ones by doing a bit of extra research. Its all about understanding what the customers are really looking for. You can also find this out by visiting their forums and watching for common threads in their discussions.

Try to think outside the square a little, is the guy searching for a drill looking for a drill or does he really need a hole made somewhere?

Having found a market looking for something can you provide it? Chances are that at least one of the many affiliate networks will have a product that can be marketed to this needy market but if not there is an opportunity for you to provide a product yourself. If you have the time and some writing skills you can provide an information product such as an ebook full of the kind of information these folk are after. If not you could always get one written for you at elance. Then market your own product and have your own affiliates sign up at Clickbank!