What is an affiliate program?

I've mentioned affiliate programs a couple of times already in this blog, but I haven't really explained what they are. Before I started talking about the concrete small-time ways of creating income streams, I wanted you to be thinking about the word "passive" in the phrase "passive income stream". And please do not forget this word. It is important for two reasons.

1) Without the income streams being passive, you are never going to earn lots of money. You only have 24 hours a day, and there is a limit to how much you charge per hour, or whatever it is you do, that you do, when you make money doing something.

2) Money isn't the real goal of this blog. Money has no intrinsic value. What would you do in a world that had no food, no love, no water, but where you had plenty of money? Not much, because money has no value other than as a tool. In this blog, we're focusing on the only thing we ever really have in life, the most valuable thing we all get -- time. The goal of this blog is to enable you to make enough money to free up your time.

Okay, that's done, so let's talk about affiliate programs. Affiliate programs are a way of getting paid for recommending something. That almost sounds like network marketing, and in a way it is really similar, but there are two main differences.

1) All Internet-based. You can recommend products and services through email or on your website.

2) Most affiliate programs are 1-tiered, a few are 2-tiered. That means, in most affiliate programs, you only get paid for the items you have recommended and which the customer then has bought. If that customer recommends the product to someone else again, you get nothing. In 2-tiered affiliate programs, on the other hand, you can have affiliates under you, and make money off of their sales. So in effect, you're then an affiliate for the affiliate-program itself. But that's as far as it goes. In network marketing, of course, you could have "sales people" under you way down-down-down.

So, let's say you have a web site about bonsai trees. You love bonsai trees. You have excellent content on your site, and you're thus rewarded with plentiful of free traffic from the search engines. You have you're visitors trust, because you are giving away free, useful information to other bonsai enthusiasts.

One day, you buy a really excellent bonsai-kit, and you find it very useful. You'd like to tell your visitors about it. So, while keeping your integrity, you recommend this product. As it happens, the bonsai kit company has its own affiliate program, which you sign up for. Now, when you publish a link to the kit, it is a specialized link that tells the bonsai kit company it was you who sent the customer, and hence, if the customer actually buys anything, you get a cut of the cake.

Now it is important that you don't start recommending anything and everything you happen to find on the net that has an affiliate program. You don't want to loose your visitors' trust. True, helpful recommendations will, in the long run, make you the most money.

How to make the most money off of affiliate programs

A lot of affiliate programs give you 5-10 % of the sales price. That is not enough. You shouldn't go below 20 %, unless you think that product will convert extremely well from your website. Some companies give you up to 70% of the selling price, but that depends on the type of products. Digital products (eBooks, software, mp3s, divxs) don't really cost much to sell after they'we been created, so companies who sell digital products often give you a bigger slice of the cake.

And if the company offers a 2-tier affiliate program, that is even better, as this really is a way of creating residual (passive) income. If you have several affiliates under you, if only a couple of them are successful, you'll be successful too!

Last, you should be tracking everything you're doing to make money from affiliate programs. Test new strategies, new colors, new heading-sizes, everything, and see when you get the most sales. Do more of what works, and stop what isn't working.

What kind of site to build to be a successful affiliate

All the gurus say it, and I can't do anything but join the choir. There's really only one way to go about it. Find a profitable niche, research that niche, and create a niche site! When you have one site about a niche, filled with useful information, the search engines will reward you with free traffic, and this traffic converts more easily into money than anything else.

How do I build such a successful site?

By far the best program I've found is Ken Evoy's SiteBuildIt (SBI) which allows anyone to create successful niche web sites. Even though you might be a programmer, this deal is so full of marketing tools that you really cannot afford to miss it, if you want to try out affiliate marketing to make money.

Love,
Sten, Oslo, Dec. 21th 2004