If you’re a budding online entrepreneur, no doubt you have come across these two business models, being Affiliate Marketing, and Multi-Level-Marketing (MLM). In this analysis of Affiliate Marketing vs MLM we will seek to define both Affiliate Marketing and Multi-Level-Marketing, and look at some of the pros and cons of each method and why you would consider using either as an online or offline method to build your financial empire.
What is Affiliate Marketing?
Since this is a blog largely devoted to Affiliate Marketing and how to be successful at it, I won’t go to deep here and I encourage you to check out some of my other articles to find out more about it. In its barest online form, Affiliate Marketing is advertising a vendors (not your own) product online, linking to where it can be purchased, and if a customer clicks on that link and buys a product, you receive a commission. Simple? Yes. Easy? No. Most online users are more circumspect about just clicking on a link and buying something these days, and you really need to offer exceptional value to be successful in Affiliate Marketing rather that trying to ‘trick’ a customer.
What is Multi-Level-Marketing (MLM)
Sometimes known as Network Marketing, or direct selling, MLM requires you to sell products through your own personal consumption and a network of like-minded entrepreneurs. Typically, you receive a percentage of the products you sell, as well as a percentage of the sales people in your own network sells. MLM has received somewhat of a bad rap over the years due to the pressure sales techniques that some companies have employed as well as the churn rate in MLM companies themselves, as many open and go bust in a short space of time. There definitely are some reputable and very successful MLM companies such as Amway, which is one of the largest health supplement producers in the world.
Wealthy Affiliate is an excellent well known Affiliate Marketing Training Program. Though it has some of the properties of a Multi-Level-Marketing (MLM) scheme, in that you can introduce new affiliates and receive a commission for referring them online, it’s really drawing a long bow to suggest that it’s a pyramid scheme. You do not profit off the actions of members that you have referred.
As I mentioned briefly above, a course will definitely assist in moving you along in Affiliate Marketing. Finding a mentor is also a great idea, as is making that first step of, say, building a website or starting to post content. A journey of a thousand miles begins with a single step!
Yes, if you’re prepared to put in the work to learn and make it profitable, it can be worth your while. I recommend you try a course such as those I’ve made a review of in this article – they can really short circuit your tie to profitability.
There are many online business models, those that are generally considered to be of a similar ilk are dropshipping (see my article on affiliate marketing vs dropshipping) and also amazon fba (likewise, I’ve got an article on affiliate marketing vs amazon fba here). None is necessarily better than the other, though, in my opinion I like affiliate marketing because of the potential for genuinely passive income.
No. In most cases Affiliate Marketing is where an affiliate represents a vendor at a fixed commission rate, there is no selling and recruiting of other people that is normally the case in a so-called ‘pyramid scheme’. There are some affiliate programs where it is possible to recruit other affiliates, but these are the exception rather than the norm.
No. Multi-Level Marketing requires you to build a network of people and maintain relationships of some description with them. It’s not as common as a strictly online business model. Affiliate Marketing is more anonymous and more suited to online marketing as no relationship is necessary between affiliate and customer.
Main Differences between Affiliate Marketing and MLM
One obvious major difference is the products you will be selling. Typically, Multi-Level-Marketing will have a very specific brand and range of products, which cannot be deviated from. Think a brand like Herbalife which has a set range of health supplements.
In MLM, you will be ‘recruiting’ people to sell on your behalf, forming a network. Affiliate Marketing does not require this component. One benefit MLM has is the network can grow on its own, as people you have recruited in turn recruit other people, whom for most MLM plans you will also profit from.
MLM often adds the bonus of an unofficial support network, as those that have recruited you to sell typically have a vested interest in making you an effective seller. Many have quite detailed programs that can assist you on your journey.
If you are looking to become an online entrepreneur, you may find MLM does not strictly translate to the online world. It’s built on the strength of relationships; not just click on a link Affiliate marketing style. The online world is where Affiliate Marketing comes into its own; it is a strongly online based passive income play.
What are the costs involved in Affiliate Marketing?
One of the benefits of Affiliate Marketing is that it is relatively low cost. Most Affiliate Programs do not cost anything to join though they may be subject to minimum traffic requirements or compliance requirements. From there on the costs are largely discretionary; you may choose to pay for website hosting, online advertising, an email platform or any of many other ways to get your message out there.
What are the costs involved in MLM (Multi-Level-Marketing)?
They are varied across the many providers, some MLM programs require a substantial start up fee, whilst others do not. Most require you to buy the products in some shape or other, which is a cost, though, of course you do get the products.
How do I promote my products?
There are so many different ways to promote Affiliate Marketing products that the mind boggles. Think Social, SEO, SEM, email marketing and so on. I wrote a great article here on <developing SEO traffic for affiliates>. Multi-Level-Marketing is a different story. Obviously, there is the personalised selling possible with face to face that is hard to beat. As for promoting MLM products online, be careful as it depends on the guidelines of each individual program as to whether this is possible.
So, with MLM, it becomes a case of personal selling, and expanding through your network to get your products sold. It may be that your MLM program has a quota or expectation that you sell a certain amount of product to remain a pat of the system. This is not typical in Affiliate Marketing, though of course in order to be profitable you need to be directing traffic to vendor sites and have customers buying on those sites.
Which is better, Affiliate Marketing or MLM?
This is the $64 question. If you are looking to build an online presence, create content and build an audience then Affiliate marketing is probably best for you. If you’re more interested in the power of relationships and dealing with people in a face to face setting then Mulit-Level-Marketing is worth a try.
So, is MLM a pyramid scheme?
‘Pyramid Scheme’ is an oft-used term that I would describe as misleading. Really, working for any large corporate organisation could be described as a pyramid scheme. Think about it – there’s a CEO that sits on top, earning more than his executives, who sit on top of their middle managers, who have direct reports that earn less than them.. you get the picture. Some MLM platforms work in a similar fashion, meaning that you can’t out earn the person who recruited you, but this is not the same in every case.
Which is more profitable?
Definitely both MLM and Affiliate Marketing offer the potential to create great incomes. It’s not a case of which one is more profitable than the other, more a situation that whichever one you are better suited too will make you more money. Neither is a guarantee of effort free riches; both require specific work, and this is where a mentor or course can be extremely invaluable.
I’m a little biased here as I’m writing a blog around Affiliate Marketing, so it’s probably no surprise to you that I prefer Affiliate Marketing to Multi-Level-Marketing, especially as an online business. Affiliate Marketing strongly translates to the online world, whereas I don’t believe that MLM does.
As I mentioned above, definitely both can be profitable and rewarding ways to make an income. It really comes down to which you prefer.
In fact, I’ll reveal here I actually am both an Affiliate Marketer and a Network Marketer, which I guess helps me have a perspective on both industries. There’s no reason you can’t be both – they definitely can be built side by side; neither are enormous drains on your time but don’t be fooled to think either is a get rich quick scheme. Both require hard work and learning up front, but income can be almost exponential as time goes on.
Affiliate Disclaimer: In case you were in any sort of doubt, yes, I’m an Affiliate in some manner for some of these programs and products. I like to practice what I preach. If you are intending to utilise any of these offers I’d love if you went through one of these links to support my site.