“Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. The industry has four core players:
• The merchant (also known as ‘retailer’ or ‘brand’),
• The network (that contains offers for the affiliate to choose from and also takes care of the payments),
• The publisher (also known as ‘the affiliate’), and the customer.” Wikipendia
Affiliate marketing business is a multibillion dollar business. The players play the following roles:
1. Role of the Merchant in Affiliate business
The first player i.e. the merchant creates a product but has no way of reaching as many customers as he would want to. Think of a manufacturer of sunglasses in Denver, Colorado as a hypothetical example: the produced top quality glasses and has distribution network in major cities country wide. But outside the big cities, he has no way of reaching other customers. One of the customers is a lady we shall call Sue who lives in a county in California outside the big town. She wants to buy some pair of sunglasses but from the comfort of her home.
The Merchant has put up his sunglasses in Amazon for say. Since the merchant is in business of manufacturing, he may not have time to promote his product and answer queries from our customer sue. The merchant turns to player 2 in this case Amazon.
2. Role of networks in affiliate marketing business
The second player i.e. Amazon promises the merchant that he has the reach and the network to sell his sunglasses to the customers but will only do so at a small fee. The merchant agrees. Since Amazon as the network provider has thousands of products from other merchants, he may not be able to effectively sell the sunglasses.
3. Role of publisher in online affiliate Marketing business
So what does Amazon do? The turn to a guy we shall call Pat, who has a nice blog talking about the sunglasses. Pat is a knowledgeable fellow who knows the inside and outside of the sunglasses. Pat has been having sunglasses probably since he was a small bot. his blog gives tips on how to choose the right sunglasses, the kind of frame to look for etc. This guy pat has a lot to offer and has built a significant following of people interested in sunglasses. One of the followers of Pat is our lady Sue.
After sue reads all the information, she requires, she identifies the kind of sunglasses she wants in this case from our merchant in Denver. In Pat’s blog, she sees a link that pat has recommended for his followers to use to buy. Since Sue trusts the information She is given by Pat, she will click the link and proceed to order the sunglasses.
Amazon our network holder now tells Pat, our blog publisher, that since you have the clients and you are referring them to me to buy products, I will give you a cut of the commission I had charged the merchant. In this case, Amazon wants Pat to be affiliated to its network to sell products.
This is how affiliate marketing works in a layman’s language. In this case, all the 4 players are winners:
1. Our merchant wins since he is able to sell more sunglasses
2. Our network holder wins since he is able to charge a commission on the sale,
3. Our publisher wins since he is able to get a commission from the network holder for referring clients
4. The customer wins since he is able to make an informed choice based on the correct information provided by the publisher.
Our publisher pat is able to persuade and refer several customers, maybe hundreds, maybe thousands, depending on the blog niche he is in and how knowledgeable he is about the niche. Those several referrals in the affiliate network results in several thousand dollars earnings every month.
This is one of the easiest ways of earning money online.
Why start an internet affiliate marketing business?
6 reasons to start affiliate marketing business.
1. Affiliate marketing business is low cost.
While starting a physical store in town would require thousands of dollars to set up and run, starting an affiliate programme is relatively cheaper because all that you will incur is the cost of registering a domain name and the costs of hosting the website. With the high competition and new technology, the cost of domain registration and hosting is relatively low from professional webhosting companies such as Bluehost, hostgator,dreamcast.
Most of the affiliate networks are free and you don’t need to pay a cent to join them
2. You don’t need to own any products
There are thousands upon thousands of products for sale in the internet.
All you have to do is create a website full of information and then choose from a variety of items that you want to promote and sell.
Your job is to provide the information and then embed the affiliate code in your blog or use the banners and start earning money
3. Easy and fast to earn income
With affiliate marketing business, you can start earning a decent income relatively easily and fast. Most other forms of monetizing a website will take anywhere from 6 months to 1 year before the publisher can start earning any decent income. Take an example of Adsense, according to Google, Adsense is supposed to be put in a website that’s over six months old. For affiliate marketing, you can put up a website today, make a few posts and use the link for marketing tomorrow. It’s that easy and fast.
4. The payouts are high
Affiliate income is based on action or performance. You get a percent of the value of the product or an amount that’s pre determined. In pay per click models like Google Adsense, the payout rate is relatively low at times as low as $ 0.01 per click. To make $1,000 from this rate will require you to have thousands of visitors to your blog every day. BlueHost affiliate programme, pays $ 65 per sign up you refer. To make $ 1,000 in a month means you require only 16 people to sign up for BlueHost in a month.
5. No Limitations on what you can promote.
Affiliate marketing has no limitations and the sky is the limit. You can promote anything that’s on sale over the internet as long as you have the power and capability to convince someone to buy. There are no limitations as to the number of products you can promote in a single blog post.
There are no limitations as to the number of affiliate programmes that you can sign up with.
6. No costs of running the business
Affiliate business has no overheads on the part of the publisher. As long as you have access to the internet and have a computer, you are good to go.
You don’t need and office, you don’t need to buy any office furniture, you don’t need to hire people to work. It’s almost virtually free of any overheads.
7. You don’t need to be a computer geek.
In affiliate marketing business, you don’t need to know any programming languages; you don’t need to know any coding. Anyone can do it. What is required is a simple website build using WordPress, blogger, Jomula etc. most of this platforms are easy to use with drag and drop features. With additional plugins that are easy to use and install, you can build a very effective website with no knowledge of computers.
8. You have control of your business
When you run affiliate marketing business, you are the boss. You don’t take orders from anyone but you run the business as you see it fit. Whatever effort you put in will be reflected with the level of output. There is no more putting much effort and getting underpaid but you will be paid as per your efforts.
Earning passive income online means, earning income while not actively participating in the day to day activities of the business.
Do not be fooled. You cannot fail to do something and expect something in return. Newton’s law of motion states that for every action there is an equal and opposite reaction.
Dictioary.com defines passive as “not involving visible reaction or active participation”
For you to earn income online (reaction) there must be an equal and corresponding effort on your part (Action)
Earning passive income online means you must take an Action (in this case building a website) which shall actively involve you at the beginning but overtime, you will be required to do little (passively participate) in order for you to get the cash flows (reactions from your actions.)
7 steps to Earning Passive income online
1. Choose a niche to create content on.
A niche is the segment of the market that you want to target for generating income. Choosing a niche will depend on several factors key among them your knowledge about the area, your passion, the profitability of the niche among others.
To be able to know how well your niche is placed, you need to do keyword research in order to have a feel of what’s gonna be like. For sure you cannot know how people will react to your content but key word research will place you in a position where you can write with some degree of confidence.
The easiest way to do keyword research is by use of Google keyword tool.
This tool is develop for advertisers, in order to guide them on the terms to use in their adverts but the same tool can be used by a publisher to know what people are searching for in the internet.
Search terms that have high volumes means that a lot of people are searching the net to obtain information regarding a particular subject. When you build a website on this keywords that are generating high searches, you will be sure to get part of the audience if you create a website that adds value.
Do not create a blog just because keywords look nice, but create a blog where you feel you can add value and provide the information someone is looking for.
2. Choose a domain name.
After you have narrowed down the niche and you are comfortable with the keywords that you have chosen, it’s time to choose a domain name. Domain name is one that will uniquely identify you in the World Wide Web.
It’s important to choose a domain name that is related to your business.
People should be able to connect the domain name of your blog with content in the website. Example if you are going to promote hair care products and that’s the niche that you have chosen, its important to choose a domain name that’s close to what you are writing about eg, a domain name like:
If you choose a domain name like www.businessinsider.com and then you talk of hair products, people may not make the connection.
Choose a domain name that connects or relates to your business.
3. Create a website.
In order to earn passive income online, you need to have a website. A website is where people can research and access all the information that you have written.
To create a website you do not need to be a computer wizard. I recommend using wordpress to create a website. Word press is easy to use and is flexible to be used for any kind of business. When you add plugins and widgets, the functionality of wordpress is unlimited and you can make it what you want.
Many bloggers make a mistake of tweaking and adjusting the look and feel of their websites at the expense of providing information.
Let we give you an example:
If you look at www.thesitewizard.com its one of the simplest blogs I have ever come across. But when you look at the numbers, they are jaw dropping. The site has a rank of around 10,702 according to Alexa. In order for a website to rank so highly, it must be receiving a lot of traffic. The site provides a lot of useful information that people are looking for.
4. Create content that is informational.
People are looking for information to solve their problems or meet their needs. Create a website that’s offering people the information they require and you will earn income online while you are sleeping.
In other word, give people what they want in a manner that makes search engines happy and you will do this before the customer even realizes that he is buying.
Do not put up a website that’s one big sales pitch. People hate to be sold to. People hate to be pitched. You and I hate it, but people love information. They want to make a decision that’s well informed and rational. Give them what they want, give them the correct information and you earn income based on that information for many years to come.
Offline business, business men look at the strategic places to place their business. It’s all about the location, location, location of your business.
Online people are looking for information, information and more information not the look and feel or the location of the business.
Package your information well, let it be useful, informative, educative and presentable and you will turn this into a passive source of income requiring minimal maintenance from you.
5. Build Relationships.
In order to earn income online and turn the source of that income as passive income generator, you need to build relationships online in order to be successful.
People often times, buy from those they know, like and trust. They will not buy from a stranger with long sales pitch.
When you provide people with great content, they will start seeing you as a friend or an expert they can trust. When they trust you, they will buy your recommended items and you will earn income hands down, asleep if you like.
Selling should not be the priority when you are starting a website. Your first priority should be to deliver information to your audiences. When the audience finds the information useful they will trust you as an expert sharing his wealth of information.
They will warm up and will be receptive to your recommendations and then, and only then do you sell to them.
Sometimes you might even not sell hard goods but sell information goods like an e-book, software that’s downloadable etc.
Put in place a subscription form where people can give you their emails and you keep in touch with them. The email will enable you to inform your audience of new products, new information, new recommendations etc. Give them even more information.
The circle repeats itself, you inform them more, they trust you more and they will buy more.
Since we said your audience trusts you and believe in you, the chances of converting them into a sale are way high.
This is the last step into turning your website into a passive stream of income online.
After you have provided content and information that’s satisfying, this is the time to turn your traffic into money.
You may decide to use different monetization strategies like affiliate links, you may choose to add an e-commerce store to sell hard good, you may use Google adsense ads, you may decide to sell your own e-products like e-books etc.
The opportunities of making money are limitless. Since you had warmed up to your audience and they trust you, the conversion rates will be high and you will be rewarded handsomely.
Conclusion on how to earn passive income online?
Many people make the mistake of starting monetizing their blogs even before they start them. Do not be one of them, be wise. Let me give you an example:
It has taken me 3 days to research, write and refine the content of this post. The post is over 1,500 words long. That’s a lot of work and sweat, right? Yes!
But here is the beauty, once I am satisfied with the post and I hit the publish button, I will not need to write about this again for a very long time. The information will remain in the internet for long and many people will use different keywords to retrieve this post. When I add affiliate links in this post, when I display paid adverts on this page, when I use Google AdSense on this post, I will not require rewriting it tomorrow in order for me to earn income from it.
The money will continue flowing in. This is the beauty of creating an informational website aimed at proving information not aimed at selling to people.
Take the steps today, sweat today and create a stream of income that you will enjoy while sleep.
Turning the information into a passive source of income will create room for your family, partner, travel, leisure and will enable you to live a fulfilled life.
Take the step, create a website and host it at Bluehost and use your passion in earning passive income online!