In my first attempt at promoting products from Amazon I concentrated on a small niche, had a pretty good conversion rate, the market wasn't that big though and the commissions weren't that great as the products were in the price range of about $5 to $20.
It really was my first test, the formula seemed to work, so I repeated the formula again slightly different though and this time I concentrated on a product worth around $500.
Today it payed off, I sold my first targeted $500 product, commission to me about $30.
The thing is I don't think I'll be selling this product on a daily basis, I've only been getting traffic to this page for about two weeks now so only time will tell. I'm repeating the process again with another product but I'm still in the promotion stages.
All three have pretty much the same setup.
Product research - I try to find things I like and that I can talk about without getting bored.
Affiliate Research - Finding programs that fit really well with your product choice. Amazon is well known, but what I've realized is that there are many more affiliate programs out there that are willing to pay me a better percentage for the same products I can find on Amazon. With my second test, along with Amazon ads I have a pay per lead program running, when a user clicks through from my site and fills out a form I get payed $1 for the lead, it's converting pretty well, it's offering something for free and there's little effort on the users part.
Keyword research - I try to find the most non competitive keywords/phrases I can, but also have at least some daily traffic, I use this tool to gauge it. It presents a list of alternatives to your main keyword along with daily traffic estimates, that's handy in itself, what's better is it also uses Google trends to gauge traffic and competition for the keywords/phrase, just click on the little bar graph graphic next to a phrase to get the results.
What your wanting and what I find doable is a phrase or bunch of related phrases that have competition under 60,000 and for it to pay off, traffic estimates of at least 60ish.
Less competition equals easier promotion.
Just make sure the phrase you choose is what you'd think most people wanting to buy your product would use.
Building the site - Title it your best found keyphrase, the URL should be the same, sprinkle your found keywords/phrases throughout your site within meaningful content. Make sure you content is geared towards your chosen product but not just selling it, make it interesting, fun and informational, and because you also like the product you chose you should be able to talk about it all day long with glee.
Make your site visually appealing and easy to navigate as well.
And don't add any ads yet.
Promotion - Mainly link building, this should be the same old stuff, link trades, social boomarking etc, basically gaining links that use your keywords/phrases as anchor text and/or surrounding text. Because of your research in finding a low competition phrase it shouldn't take to long to rank within the first few pages of results, if not the first.
And Finally - Once your placement has settled down in the search engines and your seeing steady traffic, start adding the ads and test test test.
So that's basically my formula, it seems to work and I'm rolling with it for the time being.
It's free and easy, it just takes a little time to get setup, I definitely won't be making mad cash with just a few of these sites floating around what I'm hoping is that with a hundred of them I will.