When it comes to online marketing there are some crucial differences between affiliate and multi-level marketing that you should know about. Many tend to think they are the same, which is what I thought before I began as an affiliate marketer in 2013. But in fact, these two methods of online marketing couldn’t be more polar opposites of one another.
Here is how Wikipedia defines these two completely different online marketing strategies:
Affiliate Marketing Definition: Type of performance based marketing strategy which a business rewards for each visitor or customer brought by the affiliate marketers efforts.
Multi-Level Marketing Definition: Marketing strategy in which the sales force is compensated for both the sales that they generate and of the sales from the people they recruit.
While multi-level marketing may seem to offer the more attractive compensation plan at first glance, the opportunity is a lot more difficult and is one that I don’t fully agree with. Too many individuals who get caught in these multi-level marketing schemes tend to find themselves lost or without much of the needed help to succeed.
It takes a lot more effort and work to get yourself to climb the ladder within any given MLM opportunity. I greatly prefer affiliate marketing over MLM and you’ll soon see why. But first, let’s take a moment to go over these 5 major differences I have found between affiliate marketing and network marketing.
Difference #1: Direct MLM Sales vs. Affiliate Sales
MLM: As a multi-level marketer one of your biggest tasks is being able to sell whatever products you are buying on auto ship. Unlike affiliate marketing where you don’t need any inventory, you need to purchase products monthly on a daily basis.
Take a look at Kyani’s MLM or It Works Global for example. With these two MLM opportunities you are required to purchase products on a monthly basis just in order to qualify for commissions; products in which you are purchasing at retail value only to sell at a markup price.
Affiliate Marketing: In affiliate marketing however, you never need to worry about buying or selling any inventory. Let’s say for example you want to make a commission selling HD TV’s online.
Well all you’d have to do is head over to Amazon.com, sign-up for their Amazon Associate program, and begin referring people to purchase that product. For every person who resultantly clicks on your affiliate link, you make a 4% to 10% commission on the price of their total sales.
Difference #2: Membership Prices
MLM: As an MLM marketer not only do you need to buy products on auto ship each month, but even need to pay a hefty membership fee. Kyani distributors for example, are required to pay $299 every year just to be associated with the company.
Affiliate Marketing: The best thing about affiliate marketing is the low start-up costs that are involved. The only time you really ever need to pay a membership fee is when you’re looking to learn on how to get started with the right strategies.
But unlike MLM, because you don’t ever need inventory, big companies like Amazon are always looking to recruit more affiliate marketers in order to start referring new consumers to their products. In return, you get a nice commission for every product sold.
Difference #3: Advertising Strategies
MLM: Here is a big difference that is worth noting. The advertising strategies for MLM marketing is what I find really weakens this as a potential online opportunity. Reason being that in order to make money online, your strategies must be done on a fairly massive scale and most MLM opportunities rarely touch the surface of the type of things that need to be done.
A lot of these strategies are based on personal relationships and trust, which can make it a lot harder when you’re meeting someone for the first time or need to build a massive downline to make a residual income. This is otherwise known as referral marketing and mainly occurs through word of mouth.
Very similar to direct selling, you must be willing to do whatever it takes to sell off those products you’re buying each month or to begin building up your downline. For example, It Works Global actually entices you to hold weekly house parties in order to begin selling their body wraps and contacting family members just to recruit people into your downline. In a way, this is no different than a hard-selling opportunity similar to trying to sell off a new insurance policy.
Affiliate Marketing: The advertising strategies within affiliate marketing is more advantageous and relies more heavily on actual online marketing than MLM does. Unlike MLM, the main approach here is based on getting as many eyeballs and visitors to your affiliate marketing offers and understanding how to entice online consumers to buy.
A lot of times this can include simply informing your prospective buyers of a new product thats hit the market, or using a PPC strategy that requires you to advertise on Facebook for example. E-mail marketing is also another very popular method that can also be used with MLM’s as well, but is harder given that MLM is less focused on obtaining targeted traffic.
Affiliate marketing strategies include, but are not limited to:
- Search Engine Optimization (SEO)
- Search Engine Marketing (PPC)
- E-mail Marketing
- Content Marketing
- Display Marketing
Difference #4: Multi-tier Programs Vs. Pay Per Performance
MLM: One major aspect in which MLM marketing may feel superior to affiliate marketing is with its multi-leveled tier programs. Unlike affiliate marketing, you can get paid on a multiple number of levels. Many of these MLM programs include downlines that go 32 levels deep and this is where most commission tend to be made.
Rarely noted however, are the disadvantages of using a multi-tier program. Let’s say your constantly recruiting new people into your downline and are doing great on that end. Well if the people under you aren’t making any product sales than you’re not making any commissions.
Simply said, because the majority of your income is reliant upon the people under you making direct product sales, the larger majority of people in MLM fail and not because of their own efforts, but because of their downlines. This is why many MLM opportunities are considered to be mere ponzi schemes.
Affiliate Marketing: This depends on what is called a “pay per performance” model and unlike MLM marketing, does not depend on a downline. Despite not having that residual income opportunity, referring individuals into any given affiliate marketing networks is a lot easier as the commissions only depend on your own efforts.
In addition, a lot of the commissions you make as an affiliate marketer can be made on a recurring monthly basis, which really helps to level up the ante. Just because affiliate marketing is performance based, does not mean this is not an extremely lucrative business to get involved with. One other huge benefit when it comes to affiliate marketing is the fact your efforts can be constantly scaled, which means the more traffic you get to a given opportunity, the more sales you make for that month or year.
Difference #5: Tools & Training
MLM: Much of the tools and training involved with MLM are related to networking with other people. For example, this could depend on learning to hold a webinar, taking live daily calls, contacting friends and family members, or using social media to find interesting prospects. Other times, you’ll find that many MLMs like to include a lot of motivational speeches or training; things you also tend to find in outside job
opportunities that involvedirect selling as well.
Affiliate Marketing: Websites, websites, websites! Niche marketing is a big one and a lot of affiliate
marketers love building their presence right on Google. This is one of the most powerful ways as it allows you to leverage your traffic and make sales with various affiliate networks.
While MLM’s also use websites, there is almost no focus on proper Search Engine Optimization and many of these websites are even exact replicas of one another.
Affiliate marketing training can also deal with building a social media presence, building an e-mail list, or simply learning to send out attractive offers to your audience.
Affiliate Marketing Vs. MLM Overview
To summarize, MLM and network marketing almost always require you to purchase and sell products on a continual basis, while simultaneously recruiting new customers into your downline. It is not enough to simply be able to recruit new marketers into your MLM opportunity. You must also teach and train your downline how to do the same thing you’re doing. You can’t simply get by with an MLM working only 2 or 3 hours per day like you can with affiliate marketing. This is a full-time job at it’s finest, and many of the times, even with the appropriate effort it can feel overly difficult or impossible to succeed.
Affiliate Marketing on the other hand, is much more rewarding and based completely on individual performance. You get what you put in with affiliate marketing and many products or networks out there aren’t as overly hyped and exaggerate as it is with MLM. That’s because when done right, affiliate marketing works for most people.
There is a much higher chance of success in my opinion, and doesn’t require all the hassle involved with trying to find new individuals to join your opportunity or to sell off a random new product you received in the mail. I sometimes can’t fathom how difficult it must be to work as an MLM network marketer. So if you’re looking for a more legitimate online marketing opportunity, go with affiliate marketing. MLM doesn’t even touch the surface of the numerous benefits involved with affiliate marketing.
Thanks for checking out this post. If you have any questions on the difference between these two, please leave them down below!