Multi-level marketing vs affiliate marketing, is there a difference? Even though they are both considered network marketing, they function differently. In this article, we will talk about their functions and their negative and positive aspects.
What are they?
Network Marketing is a business model that depends on person-to-person sales by independent associates. The associates often work from home and run their own businesses. They make commissions from selling products or services through networking.
Multi-level marketing is a form of network marketing where there are multiple ways of making money including direct selling to the consumers and recruiting new associates to sell the products or services. The associates oversee multiple associates under them and those associates have multiple associates underneath them and so on and so forth. This becomes multiple levels of associates. Each multi-level marketing company has its own established compensation plan and bonuses. Amway, Avon, or Mary Kay are great examples of multi-level marketing companies.
Affiliate marketing is also another form of network marketing. This is a process when an affiliate earns a commission for marketing another company’s or person’s products/services. The affiliate usually refers or promotes a product they enjoy using and earns a small percentage of commission when a consumer purchases that product. A great example of an affiliate company is Amazon or Wealthy Affiliate.
The Difference Between Multi-level Marketing and Affiliate Marketing?
One distinction between multi-level marketing and affiliate marketing is that affiliate marketing earns a commission with products/services and only with one level of associates under them. The associates do not gain any additional commissions when their associates recruit other associates underneath. It is only one level of marketing. It is a simple compensation plan.
As an associate of a multi-level marketing business, you can earn active and passive incomes. The active income is the income earned when directly selling the product/services and recruiting associates. The passive income is the commission that you received from other recruits’ down line or the associates’ levels below them.
The Good and the Bad
Multi-level marketing and affiliate marketing both are great for working from home and be your own boss. The overhead cost is minimal to start a business. There is a community of support and templates of procedures to follow so new associates or affiliates do not have to reinvent the wheel.
For multi-level marketing businesses, associates can make passive income when they successfully build their down-line team. New associates also have opportunities to make more money than their up line recruiters.
The negative aspect is that associates have to deal with pyramid scheme stigma in order to gain the trust of their consumers. You will face many rejections but that is part of being an entrepreneur regardless of any type of business. Even though the overhead is low in cost to start, it does require some elbow grease, your time, consistency, and tenacity to be successful. Multi-level marketing and affiliate marketing are not a get-rich-quick scheme.
Are They scams?
Like other companies, there are excellent and bad network marketing companies. If the company is multi-level marketing or affiliate marketing does not mean that it is a pyramid scheme. Do multiple research. Do not allow one article opinion to impact your outcome. Read multiples and search for reviews.
With the pandemic, more people purchase products and services online so the demand rise. In my opinion, the scams are more now than ever regardless if it is a network marketing business or not because we now can operate a business online instead of a brick-and-mortar company very easily. It does not take much to create a legitimate and professional business website. It is hard to distinguish between a good business vs a scam on the surface without further research.
Many people have been scammed enough that it is difficult to establish a trust connection with the consumers. One bad company can disrupt and create trust issues for many other good companies. To avoid many scams, check for consistency in the business and how long they have been in business. Unfortunately, new online businesses will have to struggle a little more in order to establish trust.
Multi-level marketing and affiliate companies are both legitimate businesses with legitimate business models. They differ primarily on the compensation plan and different levels of associates.
However, the negative stigma of the pyramid scheme, ponzi scams, and many other scams give these marketing concepts a bad reputation.
Network marketing is here to stay. It is a rapidly growing and quickly becoming a multi-billion dollar industry. According to ventaforce.com, by 2025 the global network marketing industry is likely to be worth nearly $650 billion US dollars.
What are your thoughts? Would you be interested in multi-level or affiliate marketing if most businesses eventually evolve into network marketing? I love to hear your thoughts. Please leave your feedback below.