Active Income vs. Passive Income

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“Start a blog and make passive income.” You’ve probably seen that message a lot, right?

While I agree that blogging can be a great way to make money online (it’s been my primary source of income for more than 10 years), in general, I don’t consider blogging to be passive income. The main reasons are:

  1. There will be a lot of upfront work before you’ll start to make money from a blog (usually).
  2. Even successful bloggers that make good money usually spend a significant amount of time running their blog.
  3. Realistically, most people who start a blog will not make passive income.

While it’s definitely possible to make money passively from a website or blog, the truth is, there is a lot of upfront work that’s needed before any income will start flowing passively – and that’s often left out.

Most successful bloggers made next to nothing from their blog for the first several months, and sometimes even a year or more. When the blog does start making money, there is usually nothing passive about it.

The thing about blogging is that it gets a lot easier as time goes on. During those first few months, you’re probably working hard to get any visitors to your blog if you’re trying to make money blogging as a beginner. No one knows the blog exists, and people aren’t going to come to check it out unless it gets in front of them somehow.

But some of those visitors that do wind up on your blog will like what they see and come back again sometime in the future. Maybe they even subscribe to your email list.

With some consistent effort, your audience grows, and making money becomes possible.

But is it passive income?

Active income requires work, effort, and time. Passive income is something that flows in with little-to-no effort on your part. Most methods of making passive income (aside from investing and leveraging your money or assets) require work on the front end, and then you benefit from the passive income later.

While blogging can generate income passively, it can also be a very active way to make money. Running a popular blog is a lot of work. Of course, content creation is a big part of that, but you’ll also need to put time into networking, social media, possibly some marketing and advertising, and all of the business-related aspects like bookkeeping.

However, there are definitely some passive elements or aspects, and with the right approach, it’s possible to turn that active income into passive income.

Some of the passive aspects of blogging include:

  1. The potential to make significantly more money while reducing your working hours.
  2. Making money as a result of the content that you wrote months or years ago.
  3. Having an income that is not tied to the number of hours that you work.
  4. Being able to outsource most of the work to other people.

In this article, we’ll look at those details, as well as how you can make the shift from active to passive income.

→ Related reading: How to Start a Blog

The Formula for Passive Income

We’ll look at the details throughout this article, but making passive income online really boils down to a simple equation.

A source of ongoing traffic + a low-maintenance monetization method = passive income

There are a few different ways to turn your blog into an income-producing asset, so let’s get into the details.

Ways to Make Money Passively with a Blog or Website

Before we get into the different ways, I want to point out that none of these options are 100% passive. You will need to put in some effort, but with the right approach, it can be a smaller effort that generates a much more significant payout.

1. Niche Website/Blog

Niche websites are usually set up as blogs, but there are some key differences in many aspects. Niche websites typically:

  • Publish content on tightly-focused topics.
  • Create content to target specific keywords.
  • Generate the majority of their traffic from Google searches.
  • Make money from affiliate programs, and sometimes display ads.

Because most niche websites get the majority of their traffic from Google searches, there is usually less emphasis on building a relationship or connection between the blogger and the reader. The goal of a niche website is usually to get the visitor to click through an affiliate link and buy a product, or click on an ad.

One of the nice things about running a niche site or blog is that you don’t have pressure to constantly produce new content. Since most of the traffic is coming from Google search, there are probably very few “loyal readers” who are sitting at the edge of their seats waiting for new content to be published. You could publish nothing new for a month and it’s likely that no one would notice or care.

That’s much different from the approach that most bloggers take where new content is published on a regular basis.

Not only does a niche website allow you the option to publish content sporadically and take breaks, but it also makes it possible to earn income during those times when you’re doing nothing, or next to nothing.

If you’re interested in niche websites, check out my article Complete Guide to Building a Profitable Niche Website.

2. Advertising Revenue + Traffic

Advertising isn’t my favorite way to make money from a blog, but it is one option. When I first started blogging more than 10 years ago, this was my main source of income. In fact, for a few years, ads accounted for about 90% of my blogging income.

In general, I prefer other monetization methods like selling your own products or promoting other people’s products and services as an affiliate, but there are definitely some benefits to making money with ads. The biggest benefit is that it takes no extra effort on your part. All you need to do is focus on getting traffic to your website or blog, and money can be made from the ads.

If you have a blog or website that generates traffic without a lot of effort (more on that later in this article), putting ads on the site can be a way to make passive income. Most likely, you’ll need to continue to put in some effort to keep the traffic coming and growing, but it’s possible that you could coast for a while and continue to make money without the effort.

The most lucrative way to make money from ads is to join a network that will handle everything for you. In recent years, several good ad networks have become viable options for bloggers. The best networks require you to apply and get approval before you can be a part of their network, and in some cases that involves reaching a certain level of traffic. Here are a few popular options:

  • Monumetric requires at least 10,000 pageviews per month for approval
  • Mediavine requires at least 50,000 sessions per month for approval
  • AdThive requires at least 100,000 pageviews per month for approval

Blogs and websites with less traffic can use Google AdSense, but the networks listed above will almost always generate more money than AdSense.

Using any of the 3 networks above, you could earn $10-$30+ per 1,000 pageviews. If your blog gets 1,000 pageviews per day (30,000 per month) and you’re earning $15 RPM, you would make $450 from ads that month. (RPM stand for “revenue per mille”, which is thousand in latin).

Of course, if your traffic increases or if your RPM increases, you would make more money. One of the biggest factors that will impact the RPM is the clickthrough rate (CTR) on the ads. More clicks equals more money.

3. Affiliate Revenue + Traffic

This approach is similar to putting ads on your site, but with a twist. Instead of making money from ads, you can make money when visitors click on an affiliate link on your website and then make a purchase.

If you’re not familiar with affiliate programs, it’s a way for you to make money by referring visitors to other websites. For example, you could join Amazon’s affiliate program, which they call Amazon Associates. Once you’re in the program, you can generate a special affiliate link that will track visitors sent from your website. If you have a hiking website, you could generate an affiliate link for a hiking backpack that is sold on Amazon, put that link in the content on your website or blog, and you’ll earn a small commission whenever a visitor clicks through your link and makes a purchase at Amazon (they don’t have to purchase the exact product that you recommend in order for you to earn a commission).

If you have content on your website or blog that includes affiliate links, and you have a steady flow of traffic, you have the potential for passive income.

It’s also important to note that simply putting affiliate links in your content will not necessarily lead to money. The traffic that you send through those affiliate links will need to convert into sales or leads in order for it to generate revenue. The products and services that you’re recommending need to be highly relevant to your content and the target audience, and you’re also dependent on the other site to be able to convert the visitors into sales.

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4. Selling Low Maintenance Digital Products

Over the past 7 or 8 years, the best monetization method I’ve used with my own blogs has been selling my own digital products. There are a lot of different types of digital products that you can sell, and they’re not all equal in terms of the amount of ongoing work. If your goal is passive income, you need to consider the amount and type of ongoing work that will be required by the products that you create.

Probably the two biggest factors that will determine the amount on-going work required by a digital product are: 1) how often the product needs to be updated, and 2) how much customer service is required.

For example, the following types of digit