Many times I have been asked by people "which is better, affiliate marketing or creating your own product and marketing it yourself?" I suppose that a lot of that depends on what type of goals you have and the business model that appeals most to you. Some people are drawn to affiliate marketing because of the "set it and forget it" mentality.
Affiliate marketing can be appealing in the sense that you get paid a commission just for recommending a product. The visitor clicks on your affiliate link and a cookie is then set which allows the affiliate to receive a commission if the visitor happens to purchase the product. If your websites draw a decent amount of traffic, you can make a pretty sizable income without the hassles of customer support, dealing with refunds, shipping and other headaches. Serious affiliate marketers pull in a comfortable living with income that is quite passive. Using a method of capturing email addresses to build a list for promoting products and offering useful information is important. They also have essential tools in their arsenal for product & keyword researching, PPC (pay per click), and link protection (also known as url cloaking). My product, the AmazingCloaker is one such url cloaker. The AmazingCloaker has an added feature of embedding a cookie into your web page to simulate a click through which will asure that you will still receive your commission in case some hairball bypasses your affiliate link.
On the down side, affiliate marketing can be a tough game to master. Getting traffic to your website is a big one. Blogging is a great way to attract traffic and promote your product without spending a fortune. The trade off is that you have to constantly come up with fresh content to make it work. Pay per click (PPC) such as Google AdWords, Yahoo Search Marketing, MSN, etc can be a viable way of drawing a ton of traffic and still turning a profit if you know what you're doing. If you don't, you can blow a lot of cash right out the window. Finding the right products to promote can also be a challenge. Affiliate marketing isn't the effortless lazy man's way to make money that the so called "gurus" will have you believe. It takes time, effort and dedication to make it work, just as with any business.
My personal favorite is Product Creation. I believe that if you truly want to "make it" in the internet business world, creating your own products is the key. Creating a product should only take a few hours (or a couple of weeks if you're into eBook writing) to create. Once your product is created, you simply create a sales page and you're in business. Of course having an established blog and/or network of websites to promote your products is an excellent advantage. If you don't, then it should become a part of your business plan.
Having your own product will allow you to offer an affiliate program in which you can build an army of affiliates who will be more than happy to promote your product. It should be a quality product that offers value to your customers, of course. Once you release your first product, just rinse & repeat.
Now the down sides of product creation. By marketing your own products, you have to offer support for your product, deal with refunds, etc. In my experience, creating a product with a high quality standard reduces the refund rate significantly. Even with the highest quality and best documentation, the refunders and time vampires are unavoidable. Its just a fact of life.
So which is better? In my opinion, creating your own digital product is much easier and more profitable. With a little effort in the beginning, your products will continue to produce income over and over again. Some people prefer getting their feet wet with affiliate marketing and then evolving into their own product creation. Whichever route you go, just remember that taking action and sticking with it will guarantee results. Stay focused and stick with it. Success will follow.