Affiliate marketing can be a way to generate passive income. However, it may or may not work for you. The passive income will only come online after making sure that you have materials to attract visitors to your site, as well as an increased popularity of your site. In the meantime, you have to create a stream of people who are interested in a product and who would click on the ads on your site.
There are several types of affiliate marketing, and you have to understand them first before you choose the strategy for your website, allowing you to get visitors and earning from them.
Before there was pay-per-click, there was cost-per-(thousand)-impressions or CPM. It was a method where you get paid for the number of views that a banner gets. Nowadays, that method is used for paid ads. It is no longer used for affiliate marketing. You get to show the ad a thousand times and you get a cent or two cents. Facebook and Google charge more.
The PPC model is used because it is the customer that you want to count. Or at least, the website visitor who clicks on the banner that you are interested in. You have an agreement with an e-commerce site, where they have a product or a service and you are referring people to the site. Whenever anyone clicks on the banner, you get paid a certain amount.
The fees depend on the product or service being sold. Typically, it is less than a dollar per click.
When you have a PPP model, it is important that the website visitor not only clicks on your link, but he also has to do something once he is on the referred website. There are at least two things that the visitor can do: either he buys, or he signs up for something. These sub-variants are pay-per-sale (PPS) and pay-per-lead (PPL).
Pay per sale (PPS)
As an affiliate in a PPS model, you are tasked to sell something. It can be a service, subscription or a product. The visitor clicks on the ad on your website, which sends him to a landing page; when he clicks and signifies he is buying on that website, then you get paid for it. There are some who pay a flat fee, while others pay a commission based on the amount sold.
Pay per lead (PPL)
The pay per lead model is different from the PPS only due to what the visitor does on the landing page. Typically, the visitor signs up for something, or subscribes to something, without necessarily buying anything immediately. The visitor is treated as a sales lead once he signs up on a form, or subscribes to a free newsletter. The affiliate marketer is paid a flat fee for every visitor that he referred who signed a form or a subscription.
For some websites, once you send a person to buy or subscribe to their website, that is considered as your customer and you are credited not just for any initial purchase, but also for subsequent purchases or multiple purchases.