In my opinion, affiliate marketing is an ideal tool for building passive income. By the end of this article, you'll understand why I'm convinced of that and how you can get started building an almost hands-off income.
And one thing to note is that even focusing on passive income through affiliate marketing requires prior work.
Real, hard work.
However, this work is usually far simpler than running your own product-based business, which often involves managing countless tasks such as product creation, inventory, customer support, payments, and ongoing operations.
So, promoting products as an affiliate clearly offers a visible advantage here.
Professional affiliates don't just aim to build stable affiliate earnings; they also understand how to leverage automated systems to generate truly passive income. At a minimum, this requires an automated system that captures prospects, builds trust with them over time, and directs them to the promoted offer.
This is how a hands-free income is created in the long run.
Can you truly build a passive income as an affiliate?
It's not only possible to build an income with affiliate marketing using the classic "affiliate mindset", but with a small shift in perspective, you can ensure that a large portion of that income is earned passively.
However, truly fully passive income is not entirely possible, as the system still needs to be monitored, optimized, and improved over time. This ongoing process requires manual effort.
Affiliate marketing is essentially about building a functional sales system. If you approach it manually, without a system working for you, passive income becomes impossible. There are many strategies to achieve this, which we'll explore in detail another time.
The sales system is supplied with high-quality prospects from a traffic source and tries to sell a product. The sales system can even be a simple website that gets visitors from search engines and recommends affiliate products through cleverly placed ads.
Here is an example of a simple sales system based on paid ads:
All processes, from getting leads to selling a product, can be automated, so there is no question that you can build a highly passive income with affiliate marketing when using the right affiliate tools for that.
Why you should aim for passive income with affiliate marketing
Why should you earn every single commission manually if you can automate the whole process? While the system is running, you enjoy your life, work on other affiliate projects, or take a nice vacation.
There are ways to make money online that are hard or impossible to automate, for example by offering services you have to deliver yourself — like running an SEO or web design agency.
And then there's the affiliate, whose job is to recommend other people's products or services and who can luckily automate this process with sales systems.
While I'm writing this article, I have systems running that automatically make money for me. I use the time I gain from these systems to share my knowledge and to be useful to others.
You can even use the time you gain from passive income streams to increase your passive income by working on other passive income streams. With every new passive income stream, you boost your total income as an affiliate.
Once you know how to build passive income, there's no reason not to use this knowledge for your financial benefit — anyone who has this knowledge would do the same.
How not to generate passive income
Let's first clarify how you definitely won't build a passive income with affiliate marketing:
- Spreading your affiliate link all over the internet — many beginners make this mistake. They take their affiliate link and try to post it on as many websites as possible, hoping someone will click it, buy the product, and they'll get a commission.
- Having no traffic — you always need traffic (website visitors) as a foundation. Either you build your own traffic source, for example with a website, or you buy ads on other websites.
- Having no sales system — a sales system is absolutely necessary to turn a prospect into a commission. For passive income, such a system is a central part.
If you're thinking about building a highly automated income with affiliate marketing, you have to change your mindset about how you promote affiliate products. After this shift, you will use other tools and strategies to approach and achieve that goal.
You need to understand that you are not the one doing the selling — a system does that job. Once you've programmed this way of thinking into your mind, you can move on to the next step and develop a strategy that makes passive income possible.
How to build passive income the right way
There are many ways to build passive income as an affiliate. Before we can build an automated system that can turn prospects into money, we need to know:
- which market we want to make money in.
- which product we want to recommend.
- how our sales system should work.
An affiliate who either doesn't have a good product to promote or doesn't know how to reach the target audience to recommend the product to them, can't make money. Never start a new affiliate project if you don't have either a target audience or a good product — both must be a perfect match.
Next comes the sales system that should enable us to earn passive income. The following options have proven themselves:
1. Niche site
If you focus on a small niche and create a niche site filled with valuable content, you can enjoy real passive income. At some point, the website will have enough content to automatically convert visitors into commissions. Traffic can then continue flowing for weeks and even months.
However, search engines evaluate whether a website is abandoned or actively maintained.
If a site runs for months without updating existing content or adding new material, its rankings are very likely to decline — along with traffic and revenue. Make sure you invest a few hours each month in keeping the site updated, even if that slightly disrupts the idea of completely passive income.
2. Paid ads
If you don't want to create niche sites because the effort is too big for you, invest some money, buy visitors on other websites and send them either to a small affiliate website where you promote a product, or send them directly to the provider via your affiliate link.
This last approach works only with a very limited number of products, as markets are increasingly shifting toward trust-based buying decisions. To succeed, you need to implement intermediate pages and systems designed specifically to build trust through audience- and situation-specific content — and then convert that trust into revenue.
It will take some time and a lot of testing until an ad campaign makes more money than it costs. Once the ads are profitable, you've built a passive income stream for a few weeks, months, or even years.
I run ads only on high-ticket products because current ad prices and competition can quickly kill a business. Don't even try promoting a product with less than a $50 commission — you'll burn through your ad budget very fast!
3. Lifetime affiliate programs
There are affiliate programs with recurring income. With these, you don't just earn once per customer, but as long as they keep generating revenue for the provider.
This is also a way to earn passive income.
With affiliate programs that are tied to a subscription or service, you usually get a lifetime commission. I've been working with some of these programs for years and have already built passive income with them. Noteworthy examples of my passive income streams are AWeber and GetResponse.
4. Follow-up newsletter
The next one is standard: if you don't have a list, you don't have a true online business!
Create a follow-up newsletter with a good email marketing provider, send prospects to the signup form and build an email list. You can offer something free for signing up — small info guides work very well. I usually use GetResponse or AWeber to create automated email campaigns.
The newsletter has to be aimed at a specific target audience, and you need to write several emails in advance so that your readers automatically get the first email with content right after signing up.
Every subscriber on the list goes through the whole series, which can consist of hundreds of emails. Every seventh email can promote a product so you can generate passive income with the newsletter.
Focus on the 80/20 rule when creating email content: 80% of your emails should provide value to your audience, and only 20% should be purely promotional. This is how I approach my email marketing, and it's the method I can confidently recommend for promoting effectively without being too aggressive or risking the loss of many subscribers.
Conclusion
As an affiliate, it's a good idea to develop long-term strategies to build passive income streams with automated systems. Affiliate marketing is an ideal tool for this, as practice shows.
The affiliate lifestyle allows us to highly automate our income, and we should take full advantage of it. To do this, you must make the decision to implement systems into your affiliate business.
No system means no automation — and no passive income.
Even if you only focus on affiliate programs that offer recurring income, also called lifetime affiliate programs, you can already enjoy passive income without much effort.
Alternatively, you can build a niche site that is complete in terms of content and gets free visitors from search engines. On this website you place ads in a smart way and can already generate passive income with this setup.
Or you build a sales system around paid ads. The prospects are bought through ads and passed on to the sales system, where they are prepared for the purchase and finally sent to the product sales page via the affiliate link.
There are good reasons to deal with passive income as an affiliate. The time you gain can be used, for example, to start more affiliate projects and further increase your income.
And yes, of course you can use your free time to relax. As everyone knows, even we affiliates sometimes work very hard and can develop chronic sleep deprivation.