Another good question based on a misunderstanding of the way affiliate marketing works or, more likely, the way it is often promoted as the next best thing since sliced bread.
This shows a total lack of understanding of what is required to make a success of affiliate marketing and how income is derived from it.
Yes you will hear that you can earn money while you sleep, or sip a Pina Colada on the beach, go skiing in Switzerland or while you holiday in Machu Picchu but is affiliate marketing really a passive income?
You probably want me to give you an encouraging yes but …
The honest answer is, sadly, NO!
The good news is you can have that Pina Colada on the beach after a day of skiing and earn money while doing it, but there is a catch – it’s called hard work.
Your after-skiing drink is your well-earned reward for the work you’ve done prior – this could be as much as 6 or even 12 months prior.
This earlier work effort will continue to reward you for a long time and is probably why affiliate marketing is often incorrectly considered a passive way of earning income.
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Understanding Passive Income
Wikipedia defines passive income as being:
“Passive income is income that requires minimal labor to earn and maintain. It is called progressive passive income when the earner expends little effort to grow the income. Examples of passive income include rental income and any business activities in which the earner does not materially participate.“
The most telling part is the expending minimal labor or effort and does not materially participate.
Affiliate marketing requires extensive input by the affiliate marketer to generate income. See the next paragraph on how affiliate marketers earn income.
In order to earn any sort of income an affiliate marketer must have their “ducks in a row” to get their first customer through the door and generate their first sale. And then they have to keep repeating the process if they wish to continue to earn an income.
How Do Affiliate Marketers Earn Their Income?
Affiliate Marketers earn their money by introducing customers to third party vendors who then pay the affiliate marketer an agreed commission on any purchases the customer makes.
The vendor and the affiliate marketer will likely never meet and the only agreement between them is the vendors “affiliate terms and conditions”. This is an extremely simple document that requires nothing other than an undertaking by both parties to act in accordance with it.
The affiliate marketer is effectively an independent salesperson promoting the vendor’s products in anticipation of earning an income. If no sale is made they don’t earn anything.
Sounds easy and is a simple process whereby everyone stands to gain:
- The customer gains by being directed to the correct product or solution to their needs.
- The vendor gains by not having to pay traditional staff benefits even though they now have a much bigger sales force promoting their products or services.
- The Affiliate Marketer wins by being paid for doing a great job in satisfying the customer’s needs and the sending a paying customer to the vendor.
That is the simple part …
The hard part involves a lot of work from the affiliate marketer who has to source the best, or most popular, products for his chosen niche.
He then has to promote the product by means of a website.
Throwing together a website is the easiest part of the whole process but if no-one ever gets to see the website then all the affiliate’s efforts have been in vain.
- The affiliate won’t make the necessary introduction for a sale to be completed and will not get paid.
- The vendor will not make a sale through the vendor’s efforts.
- The customer will buy likely somewhere, or something, else
Therefore in order for an affiliate marketer to be successful and make money they need to learn all there is to know about their customer niche, their product niche and how to put it all together so that their efforts are viewed by potential customers.
The affiliates main job is to drive traffic (potential customers) to the website. Without traffic there are no customers and no sales.
How do they do this?
That is the crux of the matter and requires knowledge of how the Internet works and how affiliate marketing works.
In other words learn the entire affiliate marketing process with the aim of getting ranked on page 1 in Internet searches. Page 1 of searches is where the traffic lands up when doing a search for a particular something.
Not many people vernture beyond page 1 when doing an Internet search – consider your own experience, how often do you click over to page 2 and do you ever go to page 3?
- An internet search is how the customer finds the affiliate marketer’s website – provided it is on page 1 of searches.
- The affiliate marketer’s website will ideally help the potential customer by supplying them with relevant advice and point them in the right direction – the vendor’s site. It is not the job of the affiliate marketer to actually make the sale, that is the job of the vendor.
Is Affiliate Marketing a Good Business?
Internet affiliate marketing is a very good business model.
As mentioned above the entire process is a win/win/win situation. Through the use of software and the Internet, consumers, affiliates and vendors can all be connected to provide the best solution for all concerned.
The Benefits of Affiliate Marketing to the Affiliate
- Be self-employed – no more having to rely on someone else to pay their wages!
- A better lifestyle working from home and being able to spend more time with family.
- Zero commuting and all the benefits associated with this.
- Select whatever product they would prefer to promote and sell – this is often something they are deeply passionate about themselves such as a hobby or sport.
- Make sales 24/7 all over the world.
- Get paid according to, and as a direct result of, their own efforts.
- Get paid in strong stable currencies such as the US$, £ and €.
- No direct dealings with clients as the vendor does all the “heavy lifting”.
- And much much more.
The Benefits of Affiliate Marketing to the Vendor
- Maintain a sales force that requires no training, no staff benefits, no salaries and that only get paid on sales.
- Have their products displayed and promoted online 24/7 at other’s expense and efforts.
The Benefits of Affiliate Marketing to the Consumer
- Do research directly online.
- Shop online.
- Click and wait.
- No having to deal with salesmen who could sell ice in winter.
- Have access to a worldwide distribution channel.
How Much Do Affiliate Marketers Earn?
Ahh … the million dollar question.
You can do an Internet search to find out the top earners but that really is of no value to you.
Consider this.
Affiliate marketers get into the business for personal reasons.
- They might be unemployed with little prospect of finding employment – this could be for any number of reasons such as age, marital status, disability or any other personal situations.
- Desire to be self-employed.
- Wanting to work from home.
- Wanting to create a business they can pass on to their children.
- To create a second income.
And no doubt many more.
Each of these would have their own goals.
- To replace their current income.
- A certain amount of extra income each month.
- To pay the mortgage.
- Fund college fees.
- Buy a new car.
- Travel more often.
- Buy a vacation home.
- Support elderly parents.
Each of these goals can be attained through affiliate marketing and for each success the feeling is not only euphoric but life changing.
Yes there are those that earn 6 digit incomes monthly and it is possible for anyone to earn these amounts.
The important thing is what are your dreams and goals?
What is Passive Affiliate Marketing
Far too often we here that affiliate marketing creates a passive income.
I don’t know any successful affiliate marketers that do nothing yet still rake money in.
There are many that outsource a lot of the menial tasks and in so doing upscale their businesses to earn even more.
But firstly they have to be successful and then still run their businesses.
The minute they stop their efforts is the minute their income will start diminishing and continue to do so until it becomes a small trickle and finally stops.
The only people who have really got passive income perfected are the heirs to great artists such as Elvis – I believe his estate is still amongst the tope earners in the world!
Finally, Why Affiliate Marketing is Not a Passive Income.
Many years ago I was in a sales training group and our lecturer was explaining the need to continue to call on customers regularly.
He emphasized that this was important when we were trying to open a market and also once that market was a regular buyer.
He went on to explain.
“Imagine an empty tube and you place your business card in one end.
Nothing falls out the other end.
You come back the following day and the day after and the day after that, each time placing your business card in the tube and each time nothing comes out the other end.
And then one day you return to shove yet another business card in there and to your utter amazement (and delight) one of the original cards pops out the other end.
You’ve finally broken through.
The next day you decide to take the day off and don’t go to the tube to put another card in there.
What do you think happens?
Nothing – no card falls out and none will until you get back there and keep repeating the process!“
Internet affiliate marketing is like that – it is a process that must be repeated time and time again otherwise sales will dry up.
And that my friends is why it is not a passive income.
The effort you put in today will pay you back in 6 months time while you are having that Pina Colada.
And what’s more, you’ll get a lot more sales from today’s effort as long as you keep stuffing that tube!
Could you succeed at Affiliate Marketing?
Why not see for yourself?