Network Marketing vs. Affiliate Marketing: Which Makes More Sense?
Before you say it, let me take a guess. You found this website because your best friend, co-worker or family member approached you about signing up for the latest “best MLM ever” and (smartly) you’re doing your homework. You keep coming across articles about affiliate marketing and now you want to know which option is better. If this is you, you’ve come to the right place. I’m Mike Garvey. Currently, I run Brand the Boss, an affiliate marketing website, but I have successfully done network marketing in the past. Granted, I wasn’t a “7-figure earner” with the company I joined, but I did manage to seek out a modest residual income between $3-5000 per month in my first year.
So let’s talk about affiliate marketing vs. multi-level marketing (MLM).
I’ve already let the cat out of the bag when I told you I’m doing affiliate marketing right now. So, if you think my answer will be a little biased...you’d be right. Simply put, I believe affiliate marketing is a much better way to make money online when compared to most MLM businesses. I tested the waters again last year for a new company and product and I can confidently say that I won’t waste my time with MLM ever again. I’ve learned that even if you become moderately successful with multi-level marketing, your business is doomed to fail. Not because of YOU or your effort, like most MLM companies want you to believe, but because the “business model” is tragically flawed.
In this article, I am going to tell you exactly why multi-level marketing (also known as network marketing) is a serious waste of your time. And, I’ll share why I believe affiliate marketing is the best way to build a real online business or a truly sustainable side hustle, if that’s your goal.
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What is the difference between affiliate marketing and multi-level marketing?
Let’s start with multi-level marketing. If you have never really understood how this business model works, you’re not alone. Every MLM company seems to have a unique variation on how they structure their business model and commission pay out. In very basic terms, this how an MLM business works: You join a team to promote a product or service. That’s it.
Very often, joining a team means you have to become a “product of the product”. Becoming a product of the product means buying into whatever service or product you sign up to promote. When someone recruits you to join their team, it’s usually followed by a sales pitch about buying their MLM’s product or service at a discount (and signing up for the dreaded ‘auto-pay’, which I’ll discuss in more detail shortly). This is one of the many downsides of network marketing (another term for multi-level marketing).
If you’re wondering why MLM is often called a pyramid scheme, that’s because the typical business structure looks a lot like this:
In all honesty, multi-level marketing is the legal first cousin to the pyramid scheme. If there is a legitimate product or service being sold or promoted by the company, then the business is legal. That’s why most MLM organizations develop a product or service first and then build a network of team members to promote and sell it.
*Caution: If someone is telling you the only thing you have to do to make money in their organization is to recruit as many people as possible, run! That is an illegal pyramid scheme because there is no product or service to sell attached to it. to Recruitment for recruitment’s (and commissions) sake is the basis of an illegal pyramid scheme.
While many MLM companies aren’t illegal, they are pretty scammy. I knew someone with a pretty popular MLM who only promoted their product to their “downline” (the people enrolled in the business under them). In other words, their primary repeat customers were the ones they personally recruited into the business. It’s tough to make a sustainable living that way because eventually people get tired of buying the same thing month after month for hundreds of dollars a pop.
The real money earners are the ones who either come into the company during the earliest stages, or the ones who move their network from another MLM company and get their downline to make the move with them. That’s because the more people you recruit, and the more recruits you train to recruit others, the more commission you will make.
Since most people don’t join an MLM company in the beginning, they have virtually no chance to make a sustainable income month over month. If you’re looking to earn some extra spending money and you truly enjoy the product or service a multi-level marketing company has to offer, then join at your own risk. But if you’re looking to build a solid business with the potential to earn you a consistent cash-flow month over month, then affiliate marketing is the way to go.
Why MLM is a terrible business model
Multi-level marketing is a really bad business model for a few reasons. Remember how I mentioned that this business model is as close as you can get to the illegal pyramid scheme? Well, the creators of MLM businesses are well aware of this fact. As a result, they tend to overcompensate for operating in a legal gray area by imposing some pretty gnarly restrictions on how team members can position their business online.
I can speak to this firsthand. From my own personal experience with an MLM-that-shall-not-be-named, I found that I could not run a blog to promote deals or advertise products without “compliance” laying the smack down. Furthermore, I had a “top earner” tell me that even mentioning the product on the same blog page with the word “cancer” was a violation of their operating terms. Even though they supposedly had “tons” of research to back up their product claims, they still operated from a place of fear regarding how team members built their business online. This resulted in everyone in the company being encouraged to “market” in the exact same “spammy” way they did to attract new customers.
If you ever wondered why your social media pages are filled with humble-bragging posts, digitally altered “before and after” pics, outrageous claims from overly excited new customers raving about the latest in skin care, essential oils, fat-loss, ketones, shakes and weight loss, this is why. Most of those unbiased testimonials come from a person’s family and friends doing these poor souls a favor to help them sell the dream. These were all tactics my teammates engaged in. And worse, they wanted me to engage in them as well. I wanted to build a real online business so I wouldn’t do those things. After about 4 months, I was notified by a very good friend in the business that my blog page had been reported. This was after I reached out to compliance to fix any outstanding issues so I could market my business the smart way. At that point, I willingly asked the company to close my account and I’ve never looked back at the MLM business model.
You may think I’m a bit sour because of that experience, but you’d be wrong. Before joining the MLM company I just spoke about, I was in another MLM business where I made pretty good money every month. I made anywhere from $3000 to $5000 per month and didn’t have to do anything unethical or scammy to make it happen. That’s the good side of network marketing. But, that’s not the norm in the industry.
In a nutshell, here’s why the MLM business model is terrible.
It’s a lot of smoke and mirrors. The ones who do great with the business are the ones who say whatever they need to get you to join. They’ll show you examples of people who started out “just like you” who are now 6 and 7 figure earners to entice you to join them.
Your team members are your direct competition. Sure, in everyday business you can have competition. However, it’s usually not aimed at you from all sides. With multi-level marketing, you are competing against EVERYONE in your company. Not just in your network. Not just in your downline. Not just in your upline. But all of them. They are all pushing the same product, the same way, to largely the same audience. Being the newbie in that situation puts you at a massive disadvantage compared to your more established peers.
It’s hard work disguised as “get rich quick”. In fact, I’m sure the person who approached you about their MLM opportunity shared numerous success story examples that involved a pretty rapid time table. That’s a marketing tactic and it’s a good one. Most people want to hear that they can start a side hustle today and quit their job in 3 months. However, that’s not how this business (or ANY business) works. Not only do you have to create content for your new venture, but you have to create a personal brand strong enough to carry you once you burn through your warm list of your family and friends (more on that in a second). That process takes time. Learning how to successfully recruit new team members AND sell the product at the same time is a long-haul journey too. The fact is this: Anyone who says you can join their team and replace your full-time income in “no time at all” is doing so to make a commission off you. That’s it.
It’s a predatory business model. Remember that “warm market” I just mentioned? Get ready to burn through it. A warm market in the MLM world consists of your family and friends. When you first join an MLM company your upline will likely ask you to make a list of 100 of your closest family members and friends. They do this because they see an easy way to earn a quick commission from the “low-hanging fruit” in your life. Your everyday relationships and connections will become fair game for three-way calls, spammy email campaigns and more bad sales pitches than you can count.
Listen, I know some of you reading this will insist you can make money with MLM. I’ve made money in the business so I agree. It’s certainly possible. But if you’re looking to build a stable, scalable and legitimate business that you control and can maintain for years to come, then MLM is not the way to go.
What Makes Affiliate Marketing Better Than Multi-Level Marketing?
Affiliate marketing differs from multi-level marketing in a few important ways. First, you do not have to join a team or company to become an affiliate marketer. You can choose a niche you like and work directly with the companies associated with the products to promote them. For example, if you loved a certain supplement brand and are into living a healthy lifestyle, you could become an affiliate for that brand as long as the company had an affiliate program.
Sometimes a company has requirements they expect their affiliates to meet. For instance, a company may ask if you have an active website to promote their products or inquire about your social media presence, follower count, etc.
Here’s a video where I cover affiliate business model in greater detail:
With affiliate marketing you get a lot more control over your business and you don’t have to rely on a team for success. For all my supervisors and bosses out there who are ‘over’ managing people, I’m sure that’s music to your ears.
Another difference with affiliate marketing is you don’t have to split commission with anyone else for sales you make. Because you can work directly with a company as an affiliate, you get the benefit of full commission. Whether that’s 20% or 50% of a sale, it doesn’t matter. It’s all yours.
As an affiliate marketer, you can promote whatever products you like and you can change product offerings whenever you want. If one company makes unfavorable changes their affiliate program, you can simply research another, sign up to become an affiliate and start promoting it in your business. In the MLM world, switching from one company to another is usually met with resistance from your team and, in the most extreme cases, online smear campaigns directed at you from your upline and former teammates. With affiliate marketing, if I want to make a change, I can do that without worrying about building a new team from scratch, finding new recruits, or scrubbing my social media profiles of the old company and product. I can simply pivot and keep going.
Those are just a few of the ways that affiliate marketing is better than multi-level marketing. The blueprint to build a solid, scalable business is there with this model.
Affiliate Marketing - A Legitimate Online Business
Before you finish reading this and believe that affiliate marketing is a surefire thing, let me clarify something. The majority of people who start multi-level marketing and affiliate marketing businesses never earn a full-time living from it. Most startups, from brick and mortar stores to online businesses, fail within their first 3-5 years. And while there is risk associated with every new professional venture, that risk is amplified when discussing affiliate marketing and multi-level marketing. Why?
The number one reason people fail in affiliate marketing is simple. People fail because they don’t take the business seriously.
Affiliate marketing is a real business that pulls in billions of dollars per year. It’s the digital equivalent of word-of-mouth advertising. It’s been around forever and will continue to be around. And you can capitalize on the market. No, it’s not too late. No, it’s not too saturated. You just have to approach the business with a long-term vision and work ethic to make it work.
I’m going to share a few things I did when I first got started in the affiliate marketing world.
First, I decided on a niche. I made a list of all the things I was interested in, from the general to the super specific. I did some research on which companies were associated with my top 3 interests. I made sure I focused on how scalable each offering was and how well I could promote it.
From there, I went about finding the most profitable affiliate programs attached to my interests. There were literally hundreds of programs I could choose from in certain niches. My goal was to find one with quality products or services associated with it. Of course, another consideration I had was the commission payout and percentage attached to each program. It’s one thing to love a product, but if a company is only offering a 2% commission for each sale you make, that’s certainly not worth your time. Keep that in mind as you begin selecting affiliate programs for your business.
Then I decided on the platforms where I would promote my business. There are many avenues you can choose to advertise for your affiliate marketing business. Will you launch a YouTube channel? Is creating content for LinkedIn the best way to reach your audience? Will you create a blog? Those are all things to consider when starting your affiliate marketing business.
Finally, you have to understand the best way to keep the momentum going in your business once you have a few sales under your belt. I discovered the best way to do that is to reinvest into it to ensure your business is a self-funded entity as quickly as possible.
If you don’t treat your affiliate marketing like a real business, you won’t be focused on the strategy needed to create a sustainable business model and it will fail. So instead of fumbling around the internet trying to piece together a good business plan, I have a better idea.
Check out this new training course. It's not going to make you an expert overnight, but it's specifically designed for those of you who are just getting started online. It'll introduce you to the world of digital marketing. By the end of your first week, you’ll have a solid business plan and with the help of your business advisor, you’ll know which products and services you will be promoting.
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Mike Garvey Jr
Founder of BrandTheBoss.com
Work From Home
Want to learn how to start an online business and work from home like I do?