The Internet offers boundless possibilities for earning a living online. Upwork and Freelancers Union found that 35% of the American workforce did some freelance work in 2019. Furthermore, 77% of them said that technology made it easier to find freelance work.

Affiliate marketing is one way to make money on the Internet. Affiliate marketing is supposed to produce passive income, but does it really work? Let’s take a closer look.

Key Takeaways

  • In simple terms, affiliate marketing means selling goods and services from another person or company.
  • Nine percent of publishers surveyed produced more than $50,000 in affiliate income in 2016.
  • Always remember that you're likely to make more money with affiliate marketing content that is similar to your own.
  • Traditional advertisements and selling your own products can help if your affiliate-marketing revenue dries up.

Affiliate Marketing Defined

In simple terms, affiliate marketing means selling goods and services from another person or company. It is like a referral service. You set up a website or blog and join affiliate programs that are relevant to your audience. You can connect to these programs through affiliate networks, which provide you with a link that you include on your site. When someone clicks the link and buys the product, you get a portion of the sale as a commission.

How Much Can You Earn?

The affiliate marketing industry is growing steadily. Statista reported that spending on affiliate marketing in the U.S. was predicted to reach $8.2 billion by 2022. That's up considerably from $5.4 billion in 2017 and $1.6 billion in 2010.

Another study from VigLink offers a closer look at just how much income affiliate marketers are making. According to the survey, 9% of publishers produced more than $50,000 in affiliate income in 2016. The majority of merchants—65%—said they were making between 5% and 20% of their annual revenue from affiliate marketing. The survey also showed a link between experience and revenues. Among the merchants with the most revenue, 60% had been involved in affiliate marketing for five years or more.

65%

This majority of merchants said they were making between 5% and 20% of their annual revenue from affiliate marketing.

The biggest benefit of affiliate marketing is that you can more or less earn revenue on autopilot once it is up and running. All you need is a steady flow of traffic to your blog or website. However, there are some downsides.

If a company changes the terms of its affiliate program, your revenues could be directly affected. Becoming an affiliate for the wrong businesses can also create problems. You won't earn money if your blog or website audience doesn't feel compelled to buy their products or services. Given the growth of affiliate marketing, you’ll also have to contend with fierce competition from other marketers promoting the same products.

Finally, you'll have to keep people coming to your website with fresh content.

Developing a Successful Affiliate Marketing Strategy

It is relatively easy to get started in affiliate marketing, but generating sustainable income from affiliate programs is an entirely different ballgame. If you’re thinking of giving it a try, it is vital to lay the groundwork first.

Start by thinking about your audience. What kinds of goods and services do they want? Which products are you currently using that you would feel comfortable recommending to your readers? You can always add links to any affiliate program to your site. However, it would be best if you stuck to products that are connected with your websites to maximize the click-through rate and keep your audience.

Next, research individual affiliate programs to compare their structures. You want to consider factors such as the size of the commission and how often the company pays affiliates. Make sure you also understand any rules they impose on members of their affiliate networks. Always remember that you're likely to make more money with affiliate marketing content that is similar to your own.

Finally, be upfront with your readers. Adding a disclosure to your blog posts or somewhere on your website lets them know that they may come across affiliate links. This disclosure adds to your credibility, and it is also required by the Federal Trade Commission’s endorsement guidelines.

The Bottom Line

Affiliate marketing can be lucrative, but it takes a commitment of time and money to make it a real business. Do thorough research before you jump on the affiliate-marketing bandwagon.

Also, remember to avoid putting all your eggs in one basket. If you're hoping to build a moneymaking website, diversifying your income streams is a smart move. Traditional advertisements and selling your own products can help if your affiliate-marketing revenue dries up.