This is an article written by my father, Michael Greene.
The first thing you need to get through your head if you want to earn passive income from online affiliate marketing is that it is extremely difficult, time consuming, boring as hell, will lead to a really bad attitude and must be viewed through the lens of return on investment (ROI). If you are still reading then you must really be at your wits’ end. I’d like to promote online affiliate marketing as the brass ring of capitalism, but that would be utter nonsense. Capitalism is the toughest game in town and you better pack a lunch if you want to participate.
Here’s the deal: passive income is the wrong term to use when looking at making money online through the lens of earning a living in an industrial society. In general, the only people that earn passive income are those that own the Ohio Valley or the color blue. You are not one of those people because you are still reading this post. Instead of using the term passive income, you should use the term drip revenue. That means your revenue, if you are extremely lucky and work your tail off, will appear in drips, not floods.
Here is an example of drip revenue and its ROI: It will cost me $1.70 today to run my blog network. That sum is for hosting and domains. So far today I have earned $2.62 from my blog network. I have earned the grand sum of $0.92 in profit over my daily costs. I didn’t do any work on my blog network today in order to earn the ninety two cents, so it is by definition passive income. That just one drip, but it needs to be viewed through the lens of return on investment over time. If I earn the same amount on average every day for two years, I will have earned an annualized return of 24 percent and a gain of 54.1 percent. The total profit earned over that 24 months will be $671.60. As you can see, there isn’t any great gain made in terms of cash in hand, but the return on my investment, so to speak is simply not something that the ordinary person can realize through the stock market or in a fixed annuity, plus to participate in either the stock market or an annuity program will cost one hell of a lot more money than the dab I shell out each day.
So why would I not consider this profit of $671.60 passive income? I had to write one million words (1,000,000) on one topic to cause that $2.62 to show up today. That’s right: the money came from not spending money, which is why the ROI on it is so high. I wrote about a topic I was familiar with and publish what I wrote on my blog network and in every available space on the Internet that didn’t charge me something for the privilege of using the platform. This effort took me over three years, but it’s there now and I earn drip revenue from it. My experience is that organic traffic earns the best ROI over time, but it appears in the form of drip revenue. This form of revenue will not actually buy anything significant on a daily basis (what can you actually buy for 92 cents?) and this reality is why the vast majority of prospective online affiliate marketers don’t go after it.
However, it is also the exact reason you should go after it. Sure, it’s dull and boring and your tech friends will sniff at it if you bring it up at the bar during happy hour. Well, let them. It works over the long run and it is one hell of a lot less stressful on you than attempting to market an app or an ebook that must be purchased and paid for using a third party that allows charge backs and will take a percentage of the sales that are successful for the use of their collection system.
Do you understand yet that it will cost you a lot of money just to make one sale of your digital product or information product? Don’t forget to factor in constant expenditures for advertising!
Look, the best way to earn a decent ROI is to develop drip revenue and project out over the next decade. It’s slow and it is not at all sexy, but it works very well over the long haul.
By the way, don’t bother monetizing your blogs with anything other than Adsense. Sure, a lot of people will say the revenue from Google is so small and so full of traps that it isn’t worth it. That nonsense! Of all the sources of online affiliate income out there Google is in the best financial shape. If you don’t trip any of their TOS wires, Google will pay you because Google can pay you. I’ve been paid by Google every month for the last 42 months. It’s not always the same amount and some months I barely make the $100 required for the next month’s payout, but it shows up without me having to fight Google for it.
In the next post I’ll explain in more detail my thinking about blog building and online affiliate income as it relates to my network of niche blogs. By the way, don’t look for me to expose my niche or to provide a link to any of my blogs. There are too many ways for this to go wrong for me to take any chances revealing any information that could cause my model to come apart very quickly. It should be enough that I’m not pitching you some chance to earn an outlandish amount of passive income if you will just pay me twenty bucks. I’m not interested in your twenty bucks because the ROI is too narrow. Now go away and think about drip revenue and a 24 percent return on your investment for a little while. You will be glad you took the time out of your busy life.