Barring selling products, two of the most popular ways to make money with a website are advertising and affiliate marketing.
Both of these methods have their own pros and cons, and both have been looked down on by detractors, and I can’t count the number of posts that periodically state that advertising or affiliate marketing is dead.
Comparing just these two methods of making money online, which is the best?
What is Advertising?
Advertising on websites takes a lot from the original print media advertisements. The idea is to use an advertising network like Adsense that automatically loads (supposedly) related adverts to your site.
Your website real estate will be given over to different adverts, with the design of the adverts perhaps in your control but usually not.
What is Affiliate Marketing?
Affiliates promote or soft sell products and services and send “leads” through to the sales page of those products/services.
If the lead, this is the person who clicked though to the site, then goes ahead and purchases the product, then the affiliate gains a commission in return.
Affiliate marketing is big, perhaps not as big as advertising but there’s serious money floating around to make it profitable for all parties concerned.
Pros and Cons
Both methods have advantages and disadvantages, and often these will be based around your current situation, so as your needs change, one method may become more viable than the other.
With an advertising network, you simply sign up, get some code and paste the code on your site. Most decent WordPress themes even have settings or widgets you can use to add advertising code to.
Set and Forget
Using advertising means you set it up once and have to do little or no work from there. It’s true passive income.
Perfect for Odd Niches
Not all niches support a range of products you can promote and earn commissions from, so advertising can fill a gap.
Matches Your Content
Most networks will scan your site content to get a better feel for what adverts to show. It’s not perfect but does do a reasonable job at matching adverts to content.
Adverts only pay pennies per click. Sometimes you can get lucky and have adverts that offer a higher value per click but those are intensely competitive and the vast majority of ad network users have to cope with the minimal profit per click.
Due to the vast number of adverts being pushed at consumers on a daily basis, both on and offline, more and more people simply ignore adverts. This means less clicks and less profit!
For those people who get annoyed or offended by adverts, there are browser plugins that can block adverts completely meaning fewer clicks and fewer profits for you.
You Need a Lot of Traffic
Because adverts only pay such small amounts per click, and due to advertising blindness and ad blockers, you need a lot of traffic to profit from adverts. Imagine only getting an optimistic 5% click rate on your traffic, with 100 visitors per day that’s 5 clicks so maybe 5 cents? A dollar if you’re lucky.
Larger numbers of people visiting your site means a larger number of potential clickers.
Terms & Conditions
Not every site is eligible to get access to an advertising network, and even if you do successfully apply, you will be at the mercy of their terms and conditions. If you fall foul of these, say bye-bye to your account and earnings.
As well as that, certain niches are simply not allowed, so if you’re interested in say adult entertainment, you won’t get access to an advertising network easily.
Because you can’t control the design, style or type of advert served aby an ad network, it can ruin your lovingly created sites look. If you get too keen with adverts you could even end up looking like the classifieds in a magazine.
Affiliate Marketing Pros
Most affiliate commissions average at the 5% mark, but there are plenty that increase on this (top Amazon affiliates earn 9%). The product sale price obviously affects how much you earn (5% of $1 isn’t great but 5% of $500 is!).
Passive Income (sort of)
Once set up and running the earnings from your content is pretty much passive. It’s not a true set and forget like adverts are, as you may still need to tweak and change your content, and monitor things, but for the most part once done they can be left alone.
Multiple Income Sources
Unlike advertising networks, you can pick and choose who you affiliate with which allows for a broader range of income sources.
Because you choose who and what to affiliate with, and how those products are promoted you can control exactly what goes where on your site, the language used to promote it and so on.
This allows for greater targeting for your specific audience, which is a win-win for you and your visitors.
Affiliate Marketing Cons
Reviewing products for instance takes a lot of time and effort to create. This is sometimes offset by how you promote products. Gawker media (owners of sites like Lifehacker, Gizmodo, Gawker and io9) have an excellent way of using affiliate products to complement articles that aren’t specifically about promoting products. Instead of writing about the product, they write for their audience, with affiliated products added on top.
Still, you will also need to source the right products and sign up to and maintain multiple affiliate accounts. Take the WordPress niche, your average WordPress site would need to sign up to dozens of theme authors affiliate sites and networks, dozens more plugin ones, and then there’s hosting, domains and so on.
It can become a nightmare maintaining them all.
Still at the Mercy of Others
Affiliate marketing is about promoting other peoples products and services, so each one you sign up with will have different rules and regulations. For the most part they are quite similar and common sense.
Still, you can fall afoul of these terms from time to time.
Worse is when an affiliate network (multiple affiliate products from various sources) or program (usually just for one companies products) stops.
You have zero control over this and it can wreak havoc on your business.
I know of people who were heavily invested in promoting Woothemes products and were distraught when they stopped their affiliate program.
Amazon is notorious for suspending and cancelling affiliate accounts if one of their rules is breached.
Which Money Maker Wins?
Neither system is perfect, but in my opinion the clear winner is affiliate marketing. You simply have more control to promote things in your own way.
The fact that you can also make more money per lead and that you can make money even with limited (but targeted) traffic doesn’t hurt either!
The Bottom Line
These two methods are clearly the most common way for people involved in internet marketing to make money, and with good reason.
Which method is right for you really depends on your current situation, though affiliate marketing can be used effectively at all levels.
There’s also no reason not to use both if it can work for you and your visitors.