What about merchandise? I actually have a site where you can sell merchandise - t-shirts, hats, logos, bumper stickers, that sort of good stuff - and I think most of the people on this website don't have this, they have more pages where the internet is the ends AND the means, while for me it's just the means.
What sort of merchandise is it? Is it the sort of promotional merchandise so that you can promote a business. If so then this can work aswell for some businesses. I must admit though that for alot of online websites that make their money just from their website is less likely to do aswell promoting offline than online. The main reason for this is because when you actually see a link on a promotional product that is offline then you normally take a glance at it and don't really bother writing it down or you may even write the link down and forget to look at it. With advertising online then you are directly putting your site in front of people that are on the Internet for one reason and this is to serve the Web and to visit sites. So for many websites that doesn't do any of their business offline, online can and is normally the best place for their advertising methods.
Merchandise is probably alot better than affiliate programs. If you actually sell products on your site then you can earn alot of money and if you do it right then you can become rather big in no time at all. The only problem with directly selling merchandise is that you have to deal with the customers issues yourself so you have another thing to have to deal with. But what's good about selling merchandise is that you can create a good affiliate program so that you can get others doing most of your selling work.
An interesting post here about dealing with customers directly & the problems it can cause small businesses especially in the early days...... http://talkfinances.com/about87.html