Affiliate marketing and display ads answer the same question in two different ways: how do you turn visitors into revenue. Affiliate pays you when a visitor does something specific. Display pays you when a visitor sees something. Everything that follows comes from that one difference.
The comparison people usually make, which model earns more, has no general answer. It has a specific answer for a specific site, and this article is about how to work it out for yours.
How the two models actually pay
Display ads pay on impressions or clicks. Your income is a function of pageviews, the country your visitors come from, and how much advertisers are willing to pay for that audience. It is predictable and it starts on day one. You do not need to convince anyone of anything.
Affiliate marketing pays on conversions. Your income is a function of how many visitors take the action, and how much that action is worth. It is unpredictable at low volume and can be many times more valuable per visitor when it works.
The practical difference is variance. Display income moves slowly and rarely surprises you. Affiliate income arrives in lumps and can go to zero for a week without anything being broken.
Which one fits which kind of traffic
Display suits high volume and broad intent. News, entertainment, general interest, anything where visitors arrive curious rather than ready to act. These people will not buy, but there are many of them and they still generate impressions.
Affiliate suits lower volume and high intent. Reviews, comparisons, buying guides, tutorials that end with a recommendation. Fewer visitors, but each one arrived already considering a decision.
This is why the same article can earn very differently depending on what it is about. A piece explaining what a category is earns better with display. A piece comparing two products in that category earns better with affiliate.
Format matters here too, because not all display is equal. Push, in-page push, native and popunder behave very differently on the same page, and picking wrong is the most common reason a site concludes display does not pay. A comparison of push, pop, banner and native covers what each one does to fill rate and user experience.
Why the question is usually a false choice
Most sites that earn well run both, split by page rather than mixed on the same page.
Informational pages carry display. Commercial pages carry affiliate links and either no display or one discreet unit. This works because the two models compete for the same click. An affiliate page covered in display ads is a page where you are selling a fifty cent click instead of a fifty dollar conversion.
The rule is simple. On any given page, decide which action is worth more, and remove the thing that competes with it.
If you are coming to this from the traffic buying side rather than the publisher side, the parallel argument is in how to use affiliate advertising to earn money: the diversified approach.
How to compare them on your own site
Use revenue per thousand visitors for both. Not total revenue, not conversion rate, not RPM for one and commissions for the other. One number, same denominator.
Take a page that currently runs display. Note its revenue per thousand visitors over a full month. Replace the ads with a relevant affiliate placement and run another full month. Compare. Do this on a page with enough traffic to give you a real number, and do not run the test during a seasonal spike.
The result will often surprise you in both directions. Pages you assumed were commercial turn out to convert badly. Pages you thought were pure information turn out to have buying intent hidden inside them.
The stability argument
There is one more consideration that does not show up in revenue per visitor. Affiliate income depends on programs that can change terms, cut commissions or close. Display income depends on networks and on advertiser demand, which moves with the season and the economy.
Running only one of them means a single decision by someone else can remove your entire income. That argument is developed properly in ad networks vs affiliate programs: how to use both.
FAQ
Can you run display ads and affiliate links on the same page? You can, but on commercial pages it usually costs you money, because display units compete with the affiliate click that is worth far more. Keep them separated by page type.
Which pays more, affiliate marketing or display ads? Per visitor, affiliate pays more when the visitor has buying intent. Display pays more when they do not. At the level of a whole site, the answer depends on what share of your traffic is commercial.
Do display ads hurt affiliate conversions? They can, in two ways. They take clicks that would have gone to your affiliate link, and they slow the page down. Both reduce conversions.
Is display income more reliable? It is more predictable month to month, yes. It is not more secure, since it depends on advertiser demand and on network policies you do not control.