If you are thinking about creating a passive income stream from the internet and do not know where to start then let me tell you one thing: start with affiliate marketing.
Affiliate marketing is simply the easiest way to start making money online and build a virtual asset that will give you passive income streams later on in the future.
To begin; what precisely is affiliate marketing?
In simple terms, affiliate marketing means marketing as an affiliate. By becoming an affiliate, your job is to sell other people’s products in order to earn commission. Think of it as a digital version of door-to-door salesmanship.
Of course the life of a door-to-door salesman is a rather unpleasant one because they must go around all day, getting doors slammed in their face and only earning money if they get fortunate enough to land a sale. As a door-to-door salesman, you live and die by your ability to persuade strangers and you invest huge amounts of time to try and make the sale.
In the online world, things are a little different.
Now you are also selling other people’s products for commission but you’ll be doing it through the internet and you will make ways to make the customers come to you.
In the digital world, you have access to necessary marketing tools to build your affiliate system and you will be able to constantly tweak it to make more sales. What’s more, you can learn from the advice and mistakes of others and in some cases even use templates. In fact, you can even outsource the marketing process!
And because you’re investing less time in marketing this way, you can take on as many different products to promote as you want and thereby scale up your income significantly. In addition, you can do this ‘on the side’ of your current job to begin with and not rely on it for your main income. Affiliate marketing, if done correctly, makes a wonderful supplement to your income.
The Truth About Affiliate Marketing: Facts and Figures
That’s affiliate marketing in a nutshell but what do the numbers say? Check out this infographics from ExperienceAdvertising.com:
Affiliate Marketing Advantages & Challenges
One of the best advantage in picking up affiliate marketing as your method to make money online that it has very low barrier to entry.
You can start affiliate marketing for absolutely free. Unlike the multi-level marketing scheme which requires you to purchase products in order to be eligible to receive commission, in affiliate marketing the only thing you need to do to start is to sign up as an affiliate in affiliate networks and you can do this completely free.
Another advantage of affiliate marketing is that it allows you to make money from the things that you love and passionate about. If you are a health freak, you can start a blog about healthy lifestyle and sign up with Clickbank to start promoting health-related products to earn commission from your blog.
When it comes to promoting digital products – found in Clickbank and JVZoo – you can also expect to earn a huge commission from the product creators. There are many products in these networks that offer 60% to 75% commission and this is all possible because the creators do not need brick and mortar warehouses for storage or pay shipping costs because their products are all in digital format.
While affiliate marketing has its advantages, it also has some challenges.
One of the main challenges is the heavy competition that you will be facing. Since everyone can become an affiliate just by simply signing up to affiliate networks, then your competitors are millions of other affiliates trying to also make it. Therefore, the main challenge is on how for you to differentiate or position yourself above the other affiliates. This is about branding and I will write in separate post about this.
The other challenge is to find good products to promote. There are thousands of products out there that are simply garbage and you do not want to promote these as an affiliate even if they offer 90% commission. Why? Because once you promote garbage products, your reputation will also be tarnished even if you are not the one who created them.
Now you might wonder: why would you choose to promote as an affiliate when you could be getting more profit by creating and selling your own product?
There are many answers but the first is that you don’t have to go through the lengthy process of creating a product to sell. Creating products takes a lot of time and a lot of skill.
For example, if you’re not a proficient writer, then you might struggle to create an e-book that people are going to be happy to pay for. Likewise, if you’re not a programmer, you probably can’t make the next must-have piece of software. And if it’s a physical product that you want to sell, you’ll have to learn the entire manufacturing process.
The other option is to outsource the entire process. If you can’t write/program/design, then you can find someone who can by going onto a site like UpWork, Elance or Freelancer. Is this a good strategy? Well yes, it can be, but it will also cost you a big upfront investment and if you are just starting out, you need to ask yourself; how much are you willing to risk in creating your own products?
And here’s another thing you need to consider; you can never know if a product is going to sell well or not. So in other words, if you spend months and hundreds of dollars creating your product, you may yet find that there’s no one interested in buying it. Of course this will then leave you at a huge loss and you’ll have to either give up or sink even more money into yet another untested idea.
There are scenarios where it does make more sense to create your own product but for a lot of people, affiliate marketing makes more sense at least to begin with.
So, How Does Affiliate Marketing Work?
Now that you know why affiliate marketing can be a great choice for creating a passive income stream from the internet, it is time to look at how affiliate marketing works.
Essentially, affiliate marketing relies on cookies. Cookies are small files that you can store on the computer of any online web user. These cookies can then be used to identify that user at a later point or to retrieve information about them. Cookies are what enable sites like Facebook to keep you signed in for example and they can also be used by advertising companies to show you ads relevant to your browsing history.
In the case of affiliate marketing, cookies are used in order to show that traffic came from your website/advert and these work alongside unique ‘identifier links’ which are your private gateway to that website.
So in other words, you have your own address that you use to send people to the product page. They then get redirected to the main site but during the process a cookie is stored on their computer that is basically the digital equivalent of ‘tell ’em I sent you’. Then, when they buy a product, this is logged in your profile and at the end of the week/month/quarter you get paid your due.
To get started in digital marketing then, all you need to do is to find a product you like and you think you can sell, sign up to the affiliate program and then paste your unique link in any form of marketing, advertising or otherwise. That could be a Facebook ad, it could be an e-mail or it could even be a physical flier.
The basic outline of how affiliate marketing works can be summarized in this infographics from Pepperjam.com: