Are you a shrewd entrepreneur with your finger on the pulse? Of course you are, which is why you’ve heard about the benefits of passive income.
I know I have, which is why I’m building my own passive income stream, and documenting my experiences in a series of posts. Come along as I try affiliate marketing for the first time. You’ll see how I build my audience, search for the right affiliate products, reflect on my progress, and you’ll also get to see my income reports.
Before getting started, we need to understand the basics. Which is why in this post I discuss the benefits of passive income over active income, the advantages of affiliate marketing over other forms of passive income, and how to get started.
By the end, you’ll know whether affiliate marketing is something you would like to try yourself.
Time – The Limiting Factor
We all get the same 24 hours in a day regardless of who we are and what we do. Once that time has passed, it’s gone forever.
Money can be earned, it can be saved, and it can be spent. But time cannot be saved for a rainy day.
The beauty of passive income is that once it’s set up, the money comes in regardless of any additional input. With a passive income stream, our ability to earn becomes removed from the limitation of time.
Passive Income vs Active Income
Passive income is money received on autopilot with little requirement for maintenance.
Conversely, active income can only be earned by directly trading your time for money, such as in a pay-per-hour job or a salaried position. Under this model, the amount of money you make is directly correlated to your time. And if you couldn’t work for whatever reason, such as through injury or illness, then you would also lose your ability to earn.
Most people operate under the active income model, however, wealthy people focus on passive income. Examples of passive income include:
- Property rentals
- Share dividends
- Interest income
- Affiliate marketing
- Franchise fees
- Advertising income
The Reality of Passive Income
Setting up a passive income stream involves a large upfront investment of time. During this period, it’s likely that no money will be coming in from the venture, and just like any business project, there’s a chance it could fail.
As such, passive income should be considered a long play, where time and effort invested at the start will pay dividends long after the work was completed.
What is Affiliate Marketing?
Affiliate marketing is based on the idea of revenue sharing within an incentivized program.
An affiliate marketer connects their audience with a merchant’s products/services, and in return, they earn a commission from each sale made. This could take the form of a percentage of the sale, or it may even be a flat rate, it all depends on the terms of the program operated by the merchant.
The first step involves building an audience around a niche. Your audience will grow as you put out content that people find value in.
The best strategy is to select a niche in which you know something about. You don’t necessarily have to be an expert, but having an interest will align your passion with your earning. And on a more practical level, this approach will help you stay motivated to continue to make content.
Why Choose Affiliate Marketing?
There are many types of passive income, but the advantages of affiliate marketing include:
- Low start-up costs
- Connecting with established companies/brands
- Ready-made marketing material
- Customer support is handled by the merchant
On the spin side, there are also negatives to consider. Any potential affiliate marketer needs to be aware of:
- Costly setup fees that some merchants levy
- Changing terms and conditions
Whilst there are many benefits to affiliate marketing, much like selling on eBay or Amazon, as an affiliate marketer, you are operating on someone else’s turf. This can leave you exposed to getting screwed over, with little recourse, if you sign up with a shady merchant. The most common issue I hear about is not getting paid for sales generated.
How Does Affiliate Marketing Work?
You need to sign up to an affiliate program. As part of the setup, you will be given promotional materials to use, as well as a unique link that you place on your page/post.
When people click the link, they will be directed to a sales page to make the purchase. The unique link tells the seller the lead came from you, and you are credited with the affiliate commission if the sale is completed.
Most merchants operate a cookie system that retains your unique link on the buyer’s device. That way, if a user didn’t buy straight away, and came back at a later point and purchased, you will still be credited with the commission.
How To Get Started With Affiliate Marketing?
Affiliate marketing opportunities can be found with just about every company. So if you have a product/company in mind, simply include “affiliate program” at the end of the company name in a Google search. Bear in mind that some programs will only accept established promoters.
On the other hand, if you’re not sure what to promote, this list of potentials should get you started.
When deciding on a product and provider, it’s always good to think about the needs of your audience. Anything you promote should be congruent with your audience, and something you would use yourself. Otherwise, you risk low conversion rates and the possibility of losing followers.
Follow My Affiliate Marketing Journey
We’re all set, but let’s be realistic, creating a passive income stream is by no means easy. Not only must you build a passionate audience, but there’s no way of knowing which product will be a hit, if at all.
Subscribe to my blog to find out how things work out.