If you’re looking to earn some additional income, affiliate marketing is an effective way to do so. Unfortunately, many people mistake affiliate marketing for MLM marketing, which stands for “multi-level marketing” and is sometimes referred to as “pyramid schemes”.
This misconception around what an MLM is prevents some from starting what could otherwise be an enjoyable and lucrative side business.
Unlike MLM businesses, affiliate marketing programs cost nothing to join and don’t require that you recruit anyone into a network. Understanding the differences between affiliate marketing vs MLM can help you see how the first can actually result in a decent income.
In this post, we'll explain how both strategies work, highlighting the key differences between them. Then we'll explore some of the advantages of affiliate marketing specifically. Let's get to it!
Affiliate Marketing vs MLM: Understanding the Difference
Multi-level marketing, or pyramid schemes, is a strategy in which non-salaried participants promote and sell a product or service. The earnings are commission-based and derive from sales to end-users or to other distributors the seller has recruited into their network.
Unfortunately, MLMs are structured in a way that mainly benefits only those at the top of the hierarchy. They are very similar to pyramid schemes in this way. The only real difference is that in an MLM you make a commission on product sales to customers, whereas pyramid schemes base their pay on network recruitment.
Although MLM is not illegal and true pyramid schemes are, there are some notable similarities between the two. Even in a legal MLM, it's rare that participants make a profit. The startup investments are typically so high that it is difficult to recoup the money you put in.
Affiliate marketing is much different. With this strategy, participants choose which products they promote and earn a commission on every sale they make. This money is paid by the retailer or business to the affiliate for driving traffic, sales, or referrals. There is no network recruiting involved.
There are also no startup fees for joining an affiliate marketing program. As long as you have a method for promoting brands, you can begin doing so for free. Many people find this strategy very profitable, and the relationship is mutually beneficial for the company and individual affiliates.
3 Advantages of Affiliate Marketing vs Pyramid Schemes
Hopefully, you now have an idea of the basic differences between these two strategies. Next, let's take a look at three advantages of affiliate marketing vs MLM programs.
1. You Can Choose Which Products You Sell Based on Your Interests
One of the benefits of affiliate marketing programs is the level of control you have. For starters, you get to pick which brands you want to work with and which products or services you want to promote.
This means you have the opportunity to focus on products you are genuinely interested in and passionate about. When you choose items you're familiar with and actually use, you're able to help consumers make informed buying decisions.
Some popular and profitable niche categories for affiliate programs include health, wealth, and hobbies. DogFoodAdvisor.com is an example of an affiliate website based around something many people are passionate about – their pets:
With MLMs, you're limited to pushing specific products your parent company has chosen. You may or may not be interested in these items, and trying to sell something you don't believe in may be difficult.
2. There's No Cost To Join, and Each Sale Earns You Money
MLMs typically have membership fees and other startup costs. Most participants have to invest in a kit containing products they're supposed to sell. While promoters often receive discounts on these products, the amount usually only covers the cost of being part of the network.
In many MLMs, marketers also have to earn a certain number of points before they see any actual money. Most of the revenue you can make in this structure, if any, comes from recruiting other people into your network.
Affiliate marketing, on the other hand, is free to join. You'll earn a percentage of every sale you make, and can track your revenue with a tool such as Easy Affiliate:
Our plugin is an all-in-one affiliate management platform that you can easily integrate with your WordPress site. Being able to use tools such as this one to start your own program speaks to the freedom and flexibility this marketing technique permits.
3. You Have Complete Control Over How You Promote Products
Affiliate marketing programs monitor their participants' sales through the use of special tracking links. Brands can see how customers arrived at their sites and give credit to the promoter who directed traffic their way.
Therefore, there's a wide range of methods you can use for affiliate marketing promotions. Almost anywhere you can post your link is a viable option, so long as you aren't spamming others with comments or emails. Some of the most popular include websites or blogs, product reviews, social media, and videos.
YouTube is a popular platform for affiliate marketing promotions because you can include the affiliate links in the video description:
Affiliate marketing can be done entirely online, and you can sell to complete strangers. Although many MLM participants can make sales this way, most of their revenue comes from direct communications.
MLM hinges on recruiting other members. Therefore, a lot more personal interaction is needed in order to build out a network. Often, this can involve tactics that some consider annoying.
With affiliate marketing, you're often only speaking to people who are likely to be interested in your products. For example, with an affiliate website, you can optimize your content to target people who are searching for products in your niche.
Affiliate marketing and MLM programs are often confused. However, unlike the former strategy, it's incredibly difficult to earn a profit as part of an MLM.
As we discussed in this article, there are three advantages to affiliate marketing vs MLM programs:
- You can choose the products you sell based on your interests.
- There’s no cost to join, and you earn money on every sale.
- You have complete control over how you promote products.
Do you have any questions about affiliate marketing? Let us know in the comments section below!