There are so many choices available to create passive income for your company it can be hard to narrow down. Passive income can be recurring income, residual income, or one time income. It may originate from a product your company sells, or another company’s product or an affiliate program of which you are a member.

I’m a fan of the affiliate marketing model.  Today I want to talk about affiliate marketing from the perspective of the Web entrepreneur who becomes an affiliate of a vendor’s products, and markets the vendor’s products on the entrepreneur’s Web properties.

Let me tell you a story about my first attempt at affiliate marketing. It was 1996 and there was this new dot com player in the marketplace – Amazon.com. Sound familiar? They offered something called an associate program where you could place their products on your website and make money. Sounded pretty cool (and easy!) to me. So I signed up, placed some books on my website and waited for the money to trickle in.

And that’s exactly what it did – trickle in. You see I did it all wrong. I’ve learned a lot since then – not that I haven’t made mistakes along the way – but I’m a far cry from those days in 1996. I now make a comfortable living via passive income. And, yes, Amazon.com is still a part of the picture. 

So just what is affiliate marketing anyway? Simply stated it’s pay for performance marketing. You sell someone’s product and they give you a cut of the action. Your portion can be a set percentage, such as twenty-five percent, or a standard dollar amount.

It’s like a referral program. Have you ever referred business to a colleague and gotten something (money or a gift) in return? Same concept.

There are thousands of affiliate programs available offering a variety of products and services – from those offered by independent small business owners to major corporations.  There are even huge affiliate program networks you can go to as an affiliate to browse for and sign up for affiliate programs – such as Commission Junction, LinkShare, and ShareASale.

As a Web entrepreneur, you can promote just about anything you can think of from insurance to pet supplies to banks, to wireless service / products and more – the options are pretty much limitless. The best place to start when deciding what to offer is with your existing business. Think about what would add value to your business and browse the affiliate networks to find available products or services or head on over to a search engine and search for “affiliate” plus your topic.

You’ll want to evaluate each program to ensure it’s a good match with what you sell and determine what your potential return might be. Understanding how each program is structured will help you determine whether it will be a good deal for your business or not. Typical structures for affiliate programs are:

Percent of Sale – When you sell a merchant’s product, you receive a percent of the sales price. The range for this can be from three percent to as high as seventy-five percent. The majority of programs are set up using this method.

Pay per lead – Some merchants that have a longer sales cycle will offer this type of program. They pay you for the prospect who visits their website via your affiliate link when the prospect takes a certain action such as filling out a form to get on a mailing list. The range for pay per lead programs is typically from fifty cents to fifty dollars.

Some entrepreneurs are able to make a living and even an entire business out of earnings through affiliate programs.  Others use affiliate earnings as side income.

However it fits into your business model, affiliate marketing can give your business a nice boost. Pick the right program, with the right payment structure and you’ll see your passive income grow. It’s a great way to expand your business and create ongoing revenue streams that pay you again and again as the result of an up-front effort.

And what about the other half of this affiliate partnership, the company whose products you are selling?  Well, I’ll discuss it from their point of view in a future article.

Meanwhile, have you considered affiliate marketing?  What’s your experience been?