Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Sven Scheuerle Last updated 23.02.2021
14 Min.
earning provisions with affiliate marketing
Last updated 23.02.2021

Get rich in no time with affiliate marketing and referrals - is that even a thing? Well, it's what various platforms, guides and self-proclaimed experts promise you can do. Sven Scheuerle explains why this promise is a fallacy, what types of affiliate marketing there are and which ones are really worth the effort. 

There are many different ways to earn money as an affiliate. In this article, you'll get some interesting tips and information from me on affiliate marketing. What you won't find, however, is a roadmap on how to get rich quick. Because it's not possible with affiliate marketing either, even if some marketers out there like to claim it is. I have many years of experience in this field and can tell you here and now that you have to invest time and effort to achieve good or very good results! 

What is affiliate marketing and how does it work? 

When we talk about affiliate marketing, we mean when an affiliate and a merchant (provider) enter into a cooperation or partnership and the affiliate is given the opportunity to advertise the merchant's products or services. The merchant provides the affiliate with all of its advertising materials for this purpose. 

Affiliate marketing is nothing more than so-called "referral marketing". In short:  you recommend a product or service to a third person (e.g. your friends, relatives, website visitors). If anyone then purchases a product or uses the service, you'll receive a predefined commission. There are all kinds of commission models you can use to earn money. More about the various models later in the article. 

Important: for affiliate marketing to work at all, there must be two parties. One is the party that provides the product or service. The other is the party that recommends the product. 

This type of online marketing is a form of digital sales as everything takes place completely online. In order for the merchant to recognize who has recommended their product or service, you receive a unique and individual link with your own ID in advance. This ID allows you to be clearly identified as the referring person, i.e. the affiliate. 

Affiliate link example: 

URL: https://raidboxes.io/

Personalized ID: xzy458

This would result in the following affiliate link: https://raidboxes.io/xzy458

For you to earn a commission, prospective customers need to click on your affiliate link and purchase the respective product or service.

Do affiliate links have to be disclosed?

Whether (and how) affiliate links have to be disclosed is always a hot topic of discussion. The legal firm IT-Recht Kanzlei comes to the following conclusion on the matter: "Affiliate links must always be labeled if their marketing character is not clearly evident from the circumstances of the website. This is particularly the case if the links are embedded in supposedly editorial articles." Read more on this topic here.

The role of merchant and affiliate

As mentioned above, the system always consists of the merchant and an affiliate. As a rule, the affiliate applies to take part in the "partner program" on offer and thus signals to the merchant that they would like to advertise the merchant's products or services. 

As soon as the merchant has approved the request, affiliates have access to a variety of advertising materials, for example, logos, advertising banners, text links or blocks of texts to integrate into your newsletter. 

Here's an overview of the two terms and their synonyms:

Merchant / seller / retailer: provides the product or service and supplies the affiliate with promotional materials. 

Affiliate / publisher / partner: promotes the product or service digitally and receives a predetermined commission rate from the sale price for the successful sale or recommendation. 

graphic affiliate marketing cycle

What are the different affiliate marketing models?

There are number of different ways you can get involved in affiliate marketing. You don't necessarily need to have your own website or be active on social media channels. And that's the one big advantage of affiliate marketing: in theory anyone can do it, regardless of whether they have experience or not. 

I explain in more detail below exactly what opportunities there are with affiliate systems and how and where you can best use them. 

1. Website / blog

If you have your own website or blog, you already have very good conditions for affiliate marketing. That's because you usually have traffic, i.e. regular visitors to your website. 

I'd like to give you a simple example to illustrate how it works. Imagine you're a travel blogger and regularly post new and interesting articles about your travels on your blog. You write about, for example, which hotels you've stayed in or which activities you've taken part in with which providers. 

Now you could, for example, include suitable products or even booking forms for your partner companies on your blog. This way interested visitors can even book the hotel or activities directly. And you get a set percentage commission for each booking. 

2. Affiliate website / niche site

An affiliate website, mostly referred to as a niche site, is really just a normal website. The big difference, however, is that it's created exclusively for the purpose of affiliate marketing. 

Put simply, this means: you look for a lucrative niche in which you want to earn money with affiliate marketing and build a suitable niche site for that topic (for example, dog transport boxes). On the website, you offer your visitors information and thus an added value to the product or topic and, of course, place your affiliate links at selected points on the site. 

One nice side effect of this type of affiliate marketing is that - if you set such a project up correctly - you can actually generate purely passive income after a few months. In my Niche Business Masterclass, I explain what I've learned about affiliate marketing and how you can build your own affiliate marketing website. With the code "RAIDBOXES20" you get a discount of 20 percent on my online course. 🙂 

3. Newsletter

Besides affiliate marketing with websites or a blog, you can of course place affiliate links within newsletters. So if you already have an audience, you could promote affiliate products to them at regular intervals. 

Let's stick with the example above: if you have subscribers who are interested in dog transport boxes, you could recommend courses for dog training or dog skills to them in addition to the transport box itself. 

You naturally need to find a healthy balance between added value and advertising. If you send too many purely promotional emails, you run the risk that people will unsubscribe from your newsletter at some point. 

4. Direct messages

Direct messages are the easiest way to recommend products or services in affiliate marketing. As described above, you don't necessarily need your own website, blog or newsletter. You can send direct messages via WhatsApp, Facebook Messenger, private messages on Instagram or any other messenger service. 

Of course, you need to have a certain knack for this. Sending hundreds of direct messages a day is not everyone's cup of tea - me included! To make money this way with affiliate marketing, you have to be active over and over again. You'll also be writing to people who aren't interested in the product or service at all. 

That's the reason why I'm really glad I put my focus on building successful affiliate websites. Because your niche site will only be visited by people who are currently interested in the product or service. 

Commission models in affiliate marketing

In affiliate marketing, there are numerous commission models according to which you can be paid as an affiliate. The best known of these is by far the so-called "pay-per-sale" model where you're only paid as an affiliate if the product you recommend is actually sold. 

Besides this model, however, there are many other ways to earn a commission. I'd like to explain the best-known and most important commission models from affiliate marketing in more detail below. 

Pay-per-click (PPC)

With this commission model, the affiliate is already paid when someone clicks on the affiliate link. The advantage is that it's much quicker to get a click than a sale, for example. But with this type of model, you're usually only paid in the low cent range. 

Pay-per-lead (PPL)

In a PPL model, the affiliate is only paid when a qualified "lead" or customer contact is made. A qualified customer contact is, for example, when an interested party enters a contact form via the affiliate link and leaves an email address, telephone number or similar details. This allows the merchant to contact the lead afterwards. 

Pay-per-sale (PPS)

As already mentioned, "pay-per-sale" is the best-known and most widespread commission model in affiliate marketing. The affiliate is only paid here when someone actually buys or uses the recommended product or service via the affiliate link.

Pay-per-view (PPV)

In a PPV model, the affiliate is paid a commission for displaying banners or ads. Therefore, no direct action by customers or interested parties is required. The special feature here is that the commission is paid per "thousand contacts" (1,000 views). This type of commission is particularly interesting for affiliates who are active on platforms such as YouTube. 

Lifetime commissions 

Lifetime remuneration differs from all other known commission models as you don't just receive a one-time commission, you instead receive payment for long as the recruited customers use the service. 

A simple and nice example is a subscription where a customer pays a certain amount every month to use a tool or service. If you recommend this tool or service as an affiliate via your affiliate link and the provider offers a lifetime commission, you'll receive a certain percentage of the subscription price every month. 

Of course, this is just an example. A subscription doesn't necessarily mean the provider also offers a lifetime commission for affiliates. You may well be compensated with the first sale (i.e. "pay-per-sale" model).

For affiliates, the lifetime commission is a very lucrative way of being paid as you can plan with the set income.

Other methods

Apart from the commission models discussed in this guide, there are plenty of other commission models in affiliate marketing. From my point of view, however, these are not worth mentioning as they're hardly ever used by "average" affiliates. These models include, for example, "pay-per-install" (of software), "pay-per-print-out" (of a coupon) or "pay-per-sign-up" (registration on the provider's site).

The most popular affiliate programs & affiliate networks

Now you know what affiliate marketing is, how it works, how you can use it, as well as what commission models there are - you probably want to know where you can find suitable providers, right? 

There are a variety of useful affiliate programs and providers out there. A distinction is usually made between the so-called "in-house partner programs" and "partner networks". 

Inhouse
With an in-house affiliate program, the provider manages their affiliate program independently. They provide the affiliate system for their affiliates and also pay them.

Network
With a partner network, the provider of the network (not the merchant itself) provides the complete infrastructure for the affiliate system. The merchant only has to enter their affiliate program and can determine which affiliates can advertise their products or services. 

The network also takes over the administration and payment of the affiliates. For this, however, the merchant pays a certain price to the partner network, or the network is involved in the sales with a certain percentage.  

Partner Programs / partner networks

If you're a beginner in affiliate marketing and don't know exactly where to find suitable merchants for a certain product or service, I recommend the affiliate program directory 100partnerprogramme.de

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Using the search function, you can simply enter a product name such as "bicycle". You'll then be shown an overview of all available affiliate programs and providers who offer the corresponding products as well as an affiliate program for them. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

If you click on the button, you will see which partner network or in-house partner program you can use to promote the product or service. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

In our example, these would be the partner networks AWIN and belboon. 

Amazon PartnerNet

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Amazon PartnerNet is a real classic and is one of the most popular in-house affiliate programs among affiliates. With Amazon, affiliates benefit above all from the enormous product selection. As you likely know already, you can really buy anything on Amazon. It's a real paradise for affiliates because you can promote almost all products you find in the Amazon shop. 

Amazon offers its affiliates fixed commission rates depending on the product category. The amount of the commission is always based on the sale price. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

As an affiliate, you have numerous advertising options available to you within Amazon PartnerNet. You can create text links, integrate product boxes into your website or use classic advertising banners. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

AWIN

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

AWIN is one of the largest affiliate networks on the market. As an affiliate, you will find over 15,000 partners whose products or services you can promote. 

After logging in, you can easily search for suitable categories or even directly for an affiliate, as well as submit a request for the affiliate program. Afterwards, you get access to all the advertising material from the merchant. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Digistore24

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Digistore24 provides almost exclusively digital products on its platform for vendors to sell and for affiliates to promote. The special thing about this network is that virtually everyone is allowed to market their own digital products here, including online courses, coaching, etc. 

When you sign up as an affiliate on Digistore24, you can promote any product listed there via the marketplace. Some vendors also approve you directly so you can start promoting the product or service immediately. You have a variety of categories to choose from and filter the results.

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

RAIDBOXES  

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

RAIDBOXES also offers its own in-house affiliate program where you can earn money as an affiliate by promoting hosting plans via affiliate marketing. 

To do this, you simply need to register as an affiliate. You'll then have access to the affiliate dashboard where you'll find your affiliate ID, banner ads and also current statistics. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?
The RAIDBOXES affiliate dashboard

Other methods

In addition to the programs and networks mentioned above, there are many other great services for affiliate marketing available including:  

Important key figures in affiliate marketing

When you sign up to an affiliate program or affiliate network and search for products or services to promote, you'll see a variety of metrics about the affiliate program on each platform. 

As an affiliate, you should definitely take a closer look at these before applying to the program as they are the conditions the merchant grants you. Here are six important key figures explained: 

EPC

  • Is the so-called "earning per click"
  • Indicates how much an affiliate earns per click
  • The higher the EPC value, the more lucrative the partnership can be
  • Formula: sales x amount of commission / number of clicks = EPC

Conversion rate

  • Indicates how well the merchant's landing page converts
  • The higher the conversion rate, the more lucrative the partnership can be
  • Formula: number of page visitors / actual purchases = conversion rate

Cancellation rate 

  • Indicates how many referred leads or sales are rejected by the merchant as invalid and for which you ultimately don't receive any payment.
  • The higher the cancellation rate, the less attractive it is for the affiliate (higher probability that the buyer will also cancel their own recommendations → possibly a bad product/service).
  • Formula: total number of sales / number of cancellations = cancellation rate

Shopping cart

  • Indicates the average value of the shopping cart
  • The higher the value, the more lucrative the partnership can be
  • Formula: total number of visitors / sales by the items placed in the cart = cart conversion.

Cookie runtime

  • Specifies the period of time over which visitors or their purchases are assigned to you by means of a cookie.
  • The longer the period, the higher the probability of receiving a commission

Commission

  • Indicates what percentage of the sale or revenue you will receive as commission (based on the "pay-per-sale" model). 

The 3 best affiliate plugins for WordPress

Below are what I consider to be three of the best Amazon Affiliate plugins for WordPress. They are especially suitable if you aim to use a website or blog for affiliate marketing. 

All three plugins are exclusively suitable for WordPress. They all have a fully automatic updates of the product information, individual designs and shortcodes to integrate the products. 

The big advantage of these affiliate plugins is that you don't need any knowledge of HTML or PHP to integrate the relevant products. Even beginners can therefore take part in affiliate marketing, in the form of product placements, with the help of such plugins.

Affiliate WordPress plugin: Amazon Affiliate for WordPress (AAWP)

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

The plugin Amazon Affiliate for WordPress (AAWP) is one of the best and most popular Amazon Affiliate plugins. This plugin allows you to not only include text links on your WordPress website with just a few clicks, but also beautiful Amazon product boxes, bestseller lists, widgets and even comparison tables.  

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Important: the AAWP plugin is completely specialized on the Amazon Affiliate Program. You can only advertise products from the Amazon shop with this affiliate plugin. In addition, it is only available in a premium version. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Affiliate WordPress plugin: affiliate-toolkit

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

The plugin affiliate-toolkit for WordPress is, just like AAWP, a pure affiliate plugin you can use to integrate suitable products on your website in just a few clicks. 

This plugin has, for example, its own shortcode generator, widgets, a product import, list import, hover product links and much more. Here, too, text links, product boxes, comparison tables or even bestseller lists can be integrated via shortcode. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

With affiliate-toolkit you can promote not only Amazon products on your WordPress website, but also products or services from AWIN, eBay, Belboon, Tradedoubler and Webgains. The affiliate-toolkit plugin is also only available in a premium version.

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Affiliate WordPress plugin: Amazon Simple Affiliate (ASA2)

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Another highly recommended affiliate plugin for affiliate marketing is Amazon Simple Affiliate (ASA2). Amazon Simple Affiliate Plugin (ASA2) gives you a variety of options for integrating Amazon products on your WordPress website, just like the other two plugins recommended in this guide.  

The ASA2 plugin allows you to integrate, among others, text links, product boxes, bestseller lists or widgets. Comparison tables are not possible with this particular plugin.  

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

Moreover, the affiliate plugin includes its own product search, dynamic templates and the ability to search and insert products directly via the WordPress editor. 

The ASA2 plugin is also only available in a premium version. As with AAWP, only Amazon products can be advertised with this plugin. 

Building a Passive Income with Affiliate Marketing - Is it Really Possible?

You can use the previous version of the plugin (ASA1) free of charge. With this version, however, you can only integrate a simple product box. 

Comparison of three affiliate plugins for WordPress 

AAWPaffiliate-toolkitASA2
Shortcodesyesyesyes
Product boxesyesyesyes
Best seller listsyesyesyes
Comparison tablesyesyesno
Product importnoyesyes
Shortcode generatornoyesyes
Individual templatesyesyesyes
AMPyesyesyes
Discount adyesyesyes
Prime logoyesyesyes
URL shorteningyesyesyes
Cachingyesyesyes
SSLyesyesyes
InterfacesAmazonAmazon,
AWIN,
eBay,
Belboon,
Tradedoubler,
Webgains
Amazon
Price from49 €57 €59 $

Final thoughts

When it comes to earning money on the internet, affiliate marketing is indeed for everyone. Whether you're a beginner, an advanced user or a professional, there are many different ways to earn attractive commissions with referral marketing. 

One thing you should know though: a lot of affiliates and marketers out there unfortunately give you the wrong impression entirely! The affiliate system is not a tool with you can use to become rich overnight and never have to work again. It took me, for example, about five years to build up a stable passive 4-figure income. 

For me, affiliate marketing is a great and "easy" way to build a foothold either part-time or full-time. However, you also have to do something for it. With the right guidance, for example, a course or mentoring, you may be able to do it much faster than me. 

Do you have any other questions?

I really hope this article serves as an initial guide to the different methods of affiliate marketing for you. Maybe it's even changed your standpoint on the topic. If you have any more questions or input on affiliate marketing, feel free to leave a comment! 😊

Sven Scheuerle - Independent freelancer and passionate affiliate marketer - has been working in online marketing for many years. He is also a blogger and regularly posts on his blog BLOGGiraffe.de about self-employment in online business.

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