3 Ways to Create Passive Income With Affiliate Marketing (And the One You Should Actually Use)

Affiliate marketing is a great way to monetize any website, by recommending offers that will earn you a commission in case somebody buys an offer after your recommendation. However, as for many things in business, there are good ways to do it and bad ways as well. Inside this article, I want to tell you about three ways that you can use to create passive income with affiliate marketing. There is a bad one, an ok one, and a good one that you should actually use. Let's start!

What is Affiliate Marketing?

Let's first take some time to really define affiliate marketing. It is basically the fact to recommend a product or service, in exchange for a commission in case somebody takes the offer. This is usually done via what is called an affiliate link, which is basically a link to the website that proposes the offer, where some tracking parameter is added to know it comes from you. The offer itself can be a physical product, a service, a subscription, or any kind of product that can be acquired online. Note that the 'action' is usually a sale of the product or service, but it can also be just somebody leaving their email or creating an account, for example.

Because it's so easy to put in place, that's a solution that I recommend to most people to monetize their websites, especially at the start. However, there are many ways to actually do that, and some you should avoid, which is what we'll see now.

Detached Affiliate Marketing

The first type of affiliate marketing - and the one I'll go over quickly - is when you simply build a system around a given affiliate offer that you (or the person building the system) never actually used & have no idea if it is a good offer or not. This 'system' can be a simple article talking about the product or service you recommend, or a whole funnel. I saw people indeed building whole funnels (using ads as a traffic source, as they didn't add have a website) just to drive traffic to an affiliate offer that has a good commission, without having any idea if this was a good offer for the people that are seeing the offer.  

I guess it's nearly needless to say that you should stay away from this kind of affiliate marketing - not only I think it is fundamentally bad to send people to offers you never even used before, but it can definitely also hurt your reputation online, and that's something it is difficult to recover from.

Indirect Affiliate Marketing

The second type of affiliate marketing is the one I call indirect - where you actually tested the products you are recommending, but selling the affiliate offer is not the #1 goal of the pages where it is present. For example, I publish a lot of how-to tutorials on my website Open Home Automation, that are using some electronics components. I therefore always include affiliate links when possible inside those articles, in case people want to buy them. Or, if you have a blog where you talk about travel, you could mention some online accommodation booking platforms in your text.

I definitely recommend using this way of creating passive income as well if it makes sense for your website, as it is genuinely recommending products that you actually used to people. However, note that the conversion rates and therefore the revenue on those links is usually quite low, as it is not the end result that you want from your readers.

Active Affiliate Marketing

The last way to generate passive income from affiliate marketing is the one I call active affiliate marketing. This is when you recommend products or services on your own website, that you actually used or are still using, and where you make content about it with the sole goal of allowing your audience to benefit from the product or service as well.

For example, on this website, I recommend using DigitalOcean to host your web applications & websites, as this is the platform I've been using for years (this article you are reading at the moment is hosted on it), and I always had a good experience with them.

As another example, I also recommend on this website online investment platforms, on which I invested my own money and that are giving me great returns. As I had a great experience with them and I am still a regular user, it makes complete sense to actively promote them via blog posts & videos. 

This kind of affiliate marketing is really the one that I recommend, as not only you will be recommending products or services that you are actively using, but also it will generate more revenue for you as you will be actively promoting the offers inside your content. You can really get creative with this one - you can not only create content that talks about the product, but also how-tos, demo videos, webinars, and other ways to promote the affiliate offer. Note that for offers that have high returns, like subscriptions or high commission, high value offers, you can actually set whole funnels including advertising to promote offers, which is a great way to scale your business.

However, always note that the goal here is always to focus on how you can serve your audience - and never serve your own income first. You should also not be afraid to actually actively say what people should stay away from, which I did several times on this very website with investment platforms. 

Hope this was helpful for you, and I wish you all the best to have a successful affiliate marketing journey!