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Beginner's handbook

How to Create Passive Income with Affiliate Marketing

johannes larsson
By on June 10th, 2021 Reading Time: 9 minutes

Affiliate marketing is one of the most accessible and flexible ways to generate passive income in 2021. As a business owner, I’ve experimented with many different ways to make money online from advertising to SEO services. It wasn’t until I discovered the potential of affiliate marketing that I realized I could fund the kind of lifestyle I had always dreamt of through nothing but my computer. Finding a passive income stream this lucrative that I enjoyed so much felt like hitting the jackpot, and I’ve never looked back.

The best news? If you have an internet connection and a willingness to learn, you can also make money through affiliate links. Follow my three-step process and get started on your affiliate journey today. 

Why affiliate marketing?

Affiliate marketing has become a popular term in recent years. However, it’s actually a very old and simple concept. One person, called an affiliate marketer, recommends products to a consumer and gets a cut of the final price as an incentive from the company selling the products. This kind of word-of-mouth affiliate marketing happens every day, but it can be difficult to track the number of sales an affiliate gets for you and reward them appropriately when it’s done face to face.

Thanks to the internet, this process is becoming easier to track and optimize, and you can now recommend products to people all over the world. Consumers are also becoming more knowledgeable about affiliate marketing and realize that they don’t lose anything by purchasing through affiliate links. 

The ultimate passive income 

One of the things which has made affiliate marketing so popular with internet entrepreneurs is its huge passive income potential. If you’re willing to put in the work now, you could be reaping the rewards in your sleep years down the line. 

Pat Flynn from Smart Passive Income says:

“Affiliate marketing is a fantastic (and underused) method for generating passive income. You don’t have to worry about creating your own product, customer service is mostly out of your hands, and you can get started as soon as today if you wanted to.”

A business model you can scale 

There is also a huge opportunity to scale with affiliate marketing, as there are no limits to how much you can earn. By growing a team and setting up multiple channels, this can become a lucrative business model. 

As the CEO of Financer.com, I’ve been able to repeat my success in over 25 markets and counting. Once you figure out what works, you can use the same method as many times as you like. 

I started as a one-man operation in 2015 and now there are 45 of us in my core team, all working towards a shared goal of serving customers through affiliate marketing in 25+ countries around the world. Affiliate marketing transcends borders, languages, and industries because at its core it is simply targeted and helpful recommendations which benefit the business, the customer, and the affiliate marketer. 

A rapidly growing industry 

Affiliate marketing is increasing in popularity all over the world. The graph below shows that the US affiliate marketing spend is forecasted to reach 8.2 billion US dollars by 2022, up from just 1.6 billion in 2010.

Statista data on affiliate marketing spending data 2010–2020
Source: Statista

Step one: define your affiliate strategy 

At the beginning of your journey, you might feel overwhelmed by the number of options when it comes to affiliate marketing. However, try to see this as a positive. There are few industries quite so flexible and inclusive, and you can adapt it to your exact values, lifestyle, and goals. 

Choosing your niche 

I started my affiliate marketing journey over ten years ago, and I’ve experimented with everything from jewelry to web hosting. For me, financial products are where I’ve had the most success, so this is where I’ve focused my efforts.

When it comes to choosing your own niche, you need to tick the following boxes:

  • Hyper-targeted. People need to know exactly what to expect from you, so make your niche as specific as possible. 
  • Market demand. There need to be affiliate programs, traffic, and plenty of money-making opportunities within your niche.
  • Genuine interest. There’s no point in escaping the 9–5 grind to do something you find just as boring. If you choose a topic you find interesting, you’re much more likely to stick with it.
  • Existing expertise. This will save you a lot of time and money when creating content and give you an edge on a lot of your competition. 

Top tip: If you already have an existing traffic source like a blog or social media account, then you might be able to skip this stage altogether. Sometimes you need to pick a niche, and sometimes a niche picks you. If it’s working for you, then stick with your pre-existing niche and monetize what you already have. 

Different types of affiliate models

There are many different affiliate programs out there, so it’s worth doing some research to decide what type works best for you. Below are three popular affiliate models to consider. 

Discount codes

Discount codes encourage your customers to click your links since they’ll receive a discount when purchasing. This win-win model is popular for social media influencers.

Flat rate/one-time commission

With a flat-rate or one-time commission model, you’re paid once for every click or sale you get. This is a very simple strategy and works especially well for people with a large audience or traffic source. 

Recurring commission

Recurring commissions give you great long-term passive income prospects. Instead of being paid once per order, you can earn money month after month as long as the customer you refer continues purchasing, usually in the form of a subscription. 

Choosing affiliate networks 

The final stage of step one is to choose the affiliate networks that you want to work with. There’s an amazing range of networks available, so whatever language, country, or industry you’re looking for, you’re sure to find something. 

I’ve compiled a list of the top affiliate networks to make things easier for you. You can experiment with different networks over time and make use of what they each have to offer. 

Step two: creating content and growing an audience 

The next logical step would be creating a website. I won’t go into detail about that here, as you can find many resources about it online. I even have a free course that walks you through the exact process if you’re interested. Instead, we’re going to jump right into creating content, building trust, and increasing traffic. 

Creating value-packed content 

First, you need to create ultra-valuable content to add your affiliate links to. The better the content you create, the longer and more often your audience will spend time on your website. This will show Google that you’re a high-quality site, and it will make people more likely to see and engage with your links. 

There are many different content types you can add links to, but I highly recommend the three below. 

Blogs 

Creating websites and blog-style content is where I’ve had most of my affiliate marketing success. One of the benefits of owning your own website is that you’re not relying on social media algorithms to reach your audience.

Videos 

Click on any YouTube video and you’ll probably find an affiliate link in the description box. Video content like in-depth reviews and hauls are a great way to promote affiliate products. According to Voluum, the average conversion rate for YouTube affiliate deals is roughly 1%. That might not sound like much, but for videos attracting thousands or millions of views, this can generate a lot of passive income.

Newsletters

Creating a newsletter is another great way to take control of your readership and not be dependent on any social media platform. This is a very personal way to interact with your audience, and it gives you the unique benefit of delivering affiliate links directly to their inboxes. However, it can take a long time to build up an engaged newsletter audience, and you need to provide a lot of valuable content in between sharing your links to avoid unsubscribes.

Read also:  Boost Your Writing to Boost Your Business

Building your audience’s trust 

Without trust, you’ll earn very little through affiliate marketing. Think of it this way—when your friend recommends something to you in passing, you’re likely to want to purchase it for yourself. However, if a stranger came up to you on the street and recommended that same product, you wouldn’t be so keen. 

That’s because you trust your friend’s opinion. You can count on their taste and standards and know they wouldn’t recommend anything to you that they didn’t believe was highly valuable. These are my top tips for building trust with your audience so that you don’t feel like just another stranger on the internet:

  • Always be transparent with your affiliate links. It’s very bad practice to sneak affiliate links into your content without labeling them as such. Not only that, but you can get into trouble with the Federal Trade Commission (FTC) by not disclosing your links clearly. Below is an example of how I declare affiliate content in my blog posts.
example of how to declare affiliate content in blog posts
  • Maintain a good balance between offering value and sharing links. It’s clear when content has been created purely to promote something, so always offer as much value as possible when you’re promoting something. It will also help to add some completely neutral blog or social media posts that include no links to build up trust and show that you’re not just there to make money.
  • Stick to topics you have genuine knowledge of and interest in. People will see straight through posts that have been created by someone purely for money-making purposes and not out of genuine interest. Likewise, promoting things that feel off-brand for you or go against the values you’ve previously claimed to have will be a big turn-off for your audience.
  • Create a community. By creating a community, you can get more than just your own opinions out there. A tight-knit community raving about a product is going to feel a lot more genuine and persuasive. You can’t underestimate the power of the fear of missing out (FOMO)!

Increase your traffic 

Search engine optimization (SEO)

You can’t simply create a website and expect it to rank against the hundreds of thousands of competing sites without paying attention to SEO. There are many websites you can use to help you with your SEO practices such as SEMrush and Ahrefs, as well as paid courses and plenty of free information available online.

Read also: What Is SEO and How It Works—a Beginner’s Guide

Social media 

I’ve already touched on social media and how it’s safest not to rely entirely on one third-party platform for your affiliate income. However, this doesn’t mean social media shouldn’t play a part in your strategy. 

Concentrate on the social media platforms that are most popular with your target audience and the type of content you want to create. If video reviews are your thing, then YouTube and Instagram will be a good fit. If you’re targeting professionals, then LinkedIn may work better. 

Paid advertising 

Paid advertising is another way to drive more traffic to your affiliate links. A small boost to your Facebook or Instagram post or paying for an influencer shout-out can rapidly expand your reach. 

Step three: optimize the process to make a reliable passive income 

This is when your affiliate marketing income is going to finally become passive. As you can see, there is a lot of work required to create a successful affiliate marketing business. You might even be wondering, when does the passive part come in? 

By growing an affiliate team and treating your affiliate income as a professional business, you can finally start to reap the rewards of passive income. 

Tracking your affiliate income

Now it’s time to start tracking your affiliate income. Tracking what is and isn’t working can help you and the company whose product you’re advertising improve your campaigns and get more conversions. Keeping tabs on your links will also keep everything organized and stop you from losing track of the links you have and how successful they each are.

What metrics should you be tracking? 

  • Click-through rate (CTR)
  • Conversion rate (CR)
  • Earnings per click (EPC)
  • Pretty Links 
  • Ever Flow
  • OptinMonster
  • Link Trust 
  • Ahrefs
  • Google Analytics

Negotiating better affiliate deals from your partners 

Once you’ve developed a relationship with your affiliate partners, you can begin negotiating better deals. These are my tips for increasing your commission:

  • Back up your claims with data and solid results. Don’t just tell brands what you can do, show them exact numbers. 
  • Get creative. Come up with ideas for how you can make your affiliate deals more lucrative for you and the brands you work with. 
  • Stay professional. You are more likely to achieve what you want through your negotiation by being polite, honest, and professional. 
negotiating better affiliate deals infographic

Outsource and scale

There’s no limit to how much you can scale your affiliate marketing business. The more you outsource, the more time you can free up to work on other income streams and grow your net worth. 

Growing an affiliate team

Every business owner reaches a point where they have to decide if they want to become bigger than themselves and their personal capabilities. If you do, then it’s time to start outsourcing some of your tasks and creating a team. 

You can hire freelancers to take monotonous tasks off your hands, help you with content writing, or handling partnerships, administration, accounting, and so on. Use platforms like Upwork or Freelancer to find high-quality talents.

Repeating the same successful process with new platforms 

The great thing about creating a successful passive income stream is your financial capability is no longer directly tied to the amount of time you have. Once you’re making passive income through the work you’ve previously completed, your time is freed up to do exactly the same thing again. By repeating the process with different platforms, niches, and products, you can multiply your earnings.

Final thoughts 

I hope you’ve found this blog post informative and feel inspired to create passive income through affiliate marketing. If you follow these three steps, there’s nothing stopping you from having the same success with affiliate marketing as I have. 

Do you have any questions about creating passive income through affiliate marketing? Let me know in the comments or reach out through any of the channels below.

Ready to give affiliate marketing a go? Become a Printful affiliate partner and get 10% from every order made by customers you referred!

johannes larsson
Johannes Larsson is the founder and CEO of Financer.com, an SEO geek, and affiliate marketing expert. He’s been practicing entrepreneurship and digital marketing for over a decade and runs a global remote team. In his blog, he shares his expertise in SEO, affiliate marketing, and finance with a wealth of resources for digital entrepreneurs. Connect with him at @mrjola on Instagram and @mrjolar on Twitter.

Comments

    1. Madara Zalcmane

      Hi Amelia,
      Thank you for the kind words! Let us know if there was any information you felt was missing 🙂

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