You may have heard about Network Marketing, multi-level marketing, pyramid schemes, and/or affiliate marketing and wonder if they are the same or are they different. How do I know what is a scam and what is legitimate?
Network marketing, multi-level marketing (MLM), and pyramid schemes are similar and interrelated. Some companies operate legally while others operate illegally. Affiliate marketing is a totally different beast altogether. However, in general, people who are not familiar with internet marketing clump them all to be the same.
In this article, we will focus on multi-level marketing vs affiliate marketing to help you understand the basic concept of each technique so you can make an informed decision on what method would work best for you. This will also help you differentiate between a scam and a legitimate business.
Network Marketing
Network marketing is a type of marketing that follows a multi-level marketing business model. Selling a line of products and recruiting others to sell them with you which is called “downline”. The companies encourage networking with friends, families, and groups to sell products as well as recruit them as sellers. You make a commission on the products that you sell and a commission for the recruiters as well as the products that the recruited people sell. There could be multiple layers of recruits making a residual income from the downline. This creates a pyramid schematic.
There is a missed conception that the people at the top of the pyramid receive the highest residual income while the people at the bottom receive less. The associates below can generate more money than the associates above them. The more people you recruit under you the more residual income you will receive. Products from companies such as Avon, Mary Kay Cosmetics, Tupperware, and Asea are examples of legitimate Network Marketing programs.
The program becomes illegal as the company focuses only the downline recruitment and over-priced products with questionable merits or no products and services are being offered. Here is a great website with tips from the Federal Trade Commission for multi-level marketing businesses ==> Federal Trade Commission – Consumer Information.
Affiliate Marketing
Affiliate marketing is where you as a consumer refer different company products or services to other consumers with similar interests. You receive a commission for every product or service being sold through your referrals. One of the most well-known companies that has an affiliate program is Amazon.com.
The most common way to make money through affiliate marketing is to have your own website. Selling your own products is not a must. You do not have to sell. It is more of a referral. Your primary focus is informing and sharing with consumers your own opinions, experiences, and research on products or services that you like or do not like. You empower the consumers with informative knowledge to choose from.
If you are interested to learn more about affiliate marketing and how to get started, visit here => Affiliate Marketing.
Differences in Marketing Strategies
Here are some major differences between the two marketing strategies:
- Multi-level marketing sells one line of products for one company while Affiliate Marketing sells multiple products with multiple companies relevant to their website niche.
- Multi-level marketing or downline referrals is another distinction between multi-level and affiliate marketing. Affiliate marketing is one level of marketing. You do not make money off another affiliate’s sales while multi-level marketers make residual incomes from their different levels of recruits’ sales.
- Affiliate marketers are more of a loner working on their websites and online business while multi-level marketers create parties, group interactions, teams, and networking among others in the communities.
- Affiliate marketers do not rely on recruiters to bring residual income while multi-level marketing recruits others to sell and earn commission from the recruiters. Although the affiliate markers appreciate their fellow marketers passing on the words about them and their websites, they generally generate their own income.
Similarities
Even though there are differences in techniques and strategies, there are some similarities that are worthwhile to pay attention to. They may possibly be the reason why the public assumes multi-level and affiliate marketing are the same.
- Referrals – both marketing strategies benefit through referrals: word of mouth, internet social networking, advertisements, and/or personal websites.
- Networking – Networking through the internet is key in reaching worldwide audiences. It is an important aspect of affiliate and multi-level marketing.
- You earn commissions through selling products or services.
- Time and effort – Both marketing techniques require low upfront money investment but it requires a huge investment of time in creating and generating traffic to their products or services.
Pros and Cons
I am combining both pros and cons for both marketing strategies. There are similarities in both.
The Good
Pros #1 There is a potential of making lots of money.
Pros #2 Lower upfront money investment – It is definitely a positive attraction for entrepreneurs with small budgets.
Pros #3 You can work from home.
The Bad
Cons #1 Not instant and overnight success. It requires consistency with time and effort. Most people give up or stop after six months or more and lose interest because they have seen minimal results.
Cons #2 Long-term investment for the general multi-level marketers is slim. Only those who are willing to work hard and consistently reap the most benefits. As for Internet marketers, you will need to consistently write articles with new ideas weekly to stimulate more income from referrals. In general, people stop keeping up and maintaining their websites so their businesses fall apart.
Cons #3 Being Sociable or a Loner – Being sociable is not for everyone. Multi Level Marketing definitely geared toward being sociable while Affiliate Marketing is more of a loner. These characteristics can be a con for some while a pro for others.
My Final Thoughts
Both of these marketing strategies require dedication, consistency, and passion to make it work. There are successful multi-level marketers as well as affiliate marketers. I am currently doing both affiliate marketing and multi-level marketing. I am learning a lot!
There are many missed conceptions about multi-level marketing and affiliate marketing. They are both great ways to generate residual income. At the same time, we have the freedom of being an affiliate marketers where we can choose as many products or services from different companies as much as we like. If one business goes out of business, we can choose another. The options are limitless.
Curious to know more about affiliate marketing, check out my review of Wealthy Affiliates to see if it works for you ==> WEALTHY AFFILIATE REVIEW
As far as scams out there in the internet world, be aware and educate yourself. There are no magic buttons or magical pills that turn you into success overnight. If they promise you that, do your research before signing up. Make sure to read the fine print at the bottom or hidden in obscure places. For research, some common websites such as www.snopes.com or Better Business Bureau are great for up-to-date facts, myths, complaints, and/or recommendations.
I hope I have clarified any confusion regarding multi-level marketing and affiliate marketing. If there are additional questions, answers, or comments, please feel free to fill in the comment box below. I will definitely reply to your thoughts ASAP.
