Passive income generation is the practice of engaging in a business that involves minimal work or activity relative to active income generation. Passive income business examples can include owning and maintaining vending machines, running a laundromat, P2P lending, or owning rental properties. However, these options often involve physical activity such as equipment maintenance or money collection. Still, most of the work is managing how consumers self-interact with such businesses. If you have a talent for online marketing, you may want to give affiliate marketing a try.
What Is Affiliate Marketing?
Affiliate marketing is the online process of a third-party intermediary, known as an affiliate or publisher, passively marketing or directing online web users to buy a product or service for a predetermined commission amount. The affiliate makes a business arrangement with a company or business person to direct online consumers to their product’s website in exchange for percentage commission of each verified sale of the product.
Look at it this way: If you run a popular blog, it has an appreciable and verifiable amount of traffic and web visitors every day. A company may contact you, or you may send proposals to companies, to brainstorm ways to monetize such traffic in a mutually beneficial manner. Imagine that you make a deal with a cell phone company and embed multiple links to the company in very visible ways on your blog. You can then earn a predetermined commission for every visitor who clicks on that link and buys a cell phone from that company. The particulars of such an arrangement will always vary. Still, that, in a nutshell, is affiliate marketing.
Affiliate Marketing Pros and Cons
There are many benefits to be an affiliate marketer. For one thing, there are very low, or zero startup costs involved. You just need a computer and reliable internet. As the intermediary directing traffic to a company’s product, you don’t have to brainstorm, create, or launch a product. You don’t have to stock or physically ship anything. Also, you can make your own work hours.
However, there are also many drawbacks in being an online affiliate marketer. The only way to leverage an affiliate marketing business deal is to have a preexisting, loyal, and appreciable size of online users visiting your website or blog regularly. Why should a company make a deal with you if you are just launching a blog? Also, even if you have a large base of web traffic visitors, it may take time to generate appreciable sales.
Further, you’ll need to vet any affiliate business partner thoroughly. If you direct your online visitors to buy a defective or illegitimate product or service, your reputation will be ruined. In most cases, you will only know how many sales referrals you created for your affiliate partner. You won’t know their names. Meaning, you are essentially creating a lucrative customer list for your affiliate partner, from your own visitor traffic, that you won’t have access to.
Successful Affiliate Marketing Takes Time
About 20% of all online consumer orders are generated via affiliate marketing. Moreover, about 80% of brand-name companies have utilized affiliate marketing in one way or another to generate sales. In the beginning, you might only make a few dollars a month. Over time, and depending on how many products you market, you might make hundreds or thousands a month.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.