People who participate in network marketing (also known as multi-level marketing or MLM) will tell you there is no better way to make money online. But, be wary of their claims. The people who most often say network marketing is a great way to make money online are the ones at the top of the pyramid. They are the ones who joined the company in its beginning stages or migrated their entire downline from one company to another. Or, they are recruiting machines who see every person with a pulse as a “prospect”. Very rarely will they have a reliable method or system for their success because MLM companies typically discourage team members from uses practices that are commonplace in other internet marketing businesses.
That’s just one reason why affiliate marketing is better than network marketing. It’s a reliable and scalable business model that doesn’t require people to recruit their family and friends in order to make money. From my own experience, I can say that affiliate marketing is a much more rewarding return on investment than multi-level marketing ever was. If you are unfamiliar with the difference between affiliate and network marketing, you’ve come to the right place. Let’s discuss what each business is, the pros and cons of each and the marketing strategies associated with both.
What is Affiliate Marketing?
Affiliate marketing is a business model as old as time. It’s a digital spin on the age-old “referral, word-of-mouth” way of generating leads for business. Affiliate marketers make money by using the web to promote another company’s product or service. This can be done in a variety of ways, though most marketers use their social profiles (Facebook, Instagram, Pinterest, etc) and their website and/or blog as their primary form of marketing.
Commission is the name of the game with affiliate marketing. The basic structure of the business involves the company, the affiliate, and the customer. The marketer partners with the company or individual to promote their product or service. And, potential customers are attracted to the marketer’s website or social media through lead generation efforts.
Let’s say you search Google for the term “best vacuum cleaners”. You click on a result and it leads you to a review website that features a list of best selling vacuums. You notice that each product review ends with a clickable link attached. That link may take you directly to Amazon or the sales page of another website. Should you purchase a vacuum from that link, the person affiliated with it gets a commission on the sale. In a nutshell, that’s the process of affiliate marketing.
The Pros and Cons of Affiliate Marketing
There are a lot of pros to affiliate marketing and I am a believer in it. But, I’m smart enough to acknowledge that every good thing has downsides. So, let’s discuss some of the benefits of affiliate marketing before we turn our attention to the drawbacks.
As an affiliate marketer, it’s completely up to you which products or services you decide to promote. It’s important to pick a niche you have an interest in and find products that correspond. But, one of the biggest pros of affiliate marketing is the ability to tailor your business to brands, products and services that you truly believe in. Once you’ve determined your niche, it’s time to figure out how you plan to market the products or services from the affiliate programs you choose. Even though this business is best built with online strategies, you can still deploy offline marketing campaigns to build your business as well.
So, what are the main benefits of affiliate marketing?
Complete control - With affiliate marketing, you get a say in the products and services you want to make money on. And with so much to choose from, the choice of products and services to promote are virtually unlimited.
Passive Income - Once you build your business, you can take a somewhat passive role in scaling it. With affiliate marketing, you don’t have to “sell” as much as you have to “position”. Once you’ve put your business in a well-positioned spot (through marketing, paid ads, etc), your customers can easily find you. As long as your content is well-thought-out and your sales funnel pushes leads through to a successful close, you can start to put areas of your business on autopilot.
Low Upfront Cost - Unlike multi-level marketing where a person may have to spend hundreds (and sometimes even thousands) of dollars upfront on a company’s product to earn the right to sell it, you can sign up for most affiliate marketing programs for free!
The drawbacks of affiliate marketing are few but they do exist. They include:
Complete control - No, I didn’t copy and paste the info from above. For some, starting a business from scratch and being in complete control is a drawback because they are used to some direction (as most people come into this field from being an employee).
A heavy upfront learning curve - If you aren’t tech savvy, you might find the tools required to build an affiliate marketing business overwhelming at first.
The burden of building a real online business - Affiliate marketing is not a get rich quick scheme and that drives some people mad. In order to make money, you have to develop marketing strategies that drive customers to your page (and away from your competition).
Now that we’ve discussed affiliate marketing, let’s dive into multi-level marketing.
What is Multi-Level Marketing (MLM)?
Multi-level marketing, or network marketing as it’s sometimes called, is a business model that shares similarities to affiliate marketing. You might even think they are “first cousins” in the digital marketing world. However, they don’t share as many similarities as you might think. The biggest difference with MLM is in order to participate in the business you have to get people to sign up to organization you are promoting. Only then can your recruit promote the network marketing company’s product or service. You get a commission on what you sell and, typically, you earn a small percentage of what your team or “downline” sells. Another key factor that makes MLM different from affiliate marketing is you can earn commissions on multiple levels from your team.
That typically looks something like this: through the people you recruit.
The main goal of multi-level marketing seems to be building a big team so you can profit from their direct efforts through earned commissions. So, what are the main benefits of the MLM business structure?
Good salespeople can do well - If you’re the type who can sell ice to an Eskimo AND train/lead/manage a team of people to do the same, then you can do well with this business model.
Opportunity for residual income - This is the holy grail of a passive business model. The MLM community knows this and so they promote this idea as one of the industry's greatest benefits.
International network - If the company you join has rights to operate internationally, you can gain experience working with people across the world.
The drawbacks of multi-level marketing are legendary and include:
Recruiting burnout - If you don’t have a big network of people to burn through, once you’ve prospected your “warm market” (aka, family and friends), you’re stuck trying to figure out how to find more people to recruit who haven’t had bad experiences with MLM.
The business model has a negative stigma - It will be your job to overcome the negative stigma of the industry before you ever sell the product of service attached to the business. Usually, MLM recruits are not properly trained on how to do this, which reduces your success rate and prospect of making money.
Competition is fierce - Not only are you competing against other companies for business (which is normal), but you are competing against your own team and the thousands of other recruits in the company selling the exact same product or service, oftentimes with the exact same methods you have been trained to use.
High fees associated with joining MLM companies - Because recruits are trying to recoup their upfront investment, they usually push their downline to buy the company’s most expensive “starter” package, which can be hundreds (or even thousands) of dollars.
Multi-level Marketing vs Affiliate Marketing - The True Choice
It comes down to a few factors, but the main thing you should consider when making a choice on which business model will work for you is your ultimate goal. Do you want to have complete control of your business and the ways you can promote and market products and services? Or do you want to spend your time focused on finding and recruiting people to build a team and, potentially, make commission on their sales?
People fizzle out of MLM companies at an alarming rate because their upline (aka the person who brought them into the business) sold a dream. That dream probably sounded a little like this: “Just bring me 5 people who you know will run with you, they each find 5 people to do the same and before you know it, you’ll have residual income to last you generations.” If it were that easy, we’d all do it.
Listen, if you have a burning passion and unwavering dedication to building teams, then multi-level marketing may be your thing. But, finding 5 people who feel the same and are willing to make the same commitment with multi-level marketing is extremely hard work. That’s why most people fall out of love with the MLM dream.
If you want to lean on your own efforts and truly be the captain of your own ship, then the true choice is affiliate marketing. If you want to build a real online business and start making money by promoting products and services that are important to you, then affiliate marketing is the way to go. It’s not a get rich quick scheme and isn’t for the faint of heart. But, for the ones who stick it out, it’s a much simpler business model with an outlined path to profits.
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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?