There are many people who aren’t sure as to what are the differences between Affiliate Marketing and Network Marketing. They then cannot really understand which is the better option for them. It can be hard to get the right information, especially if you are speaking to someone who hasn’t had experience with them both. This usually leads to a very one-sided answer, that really doesn’t help.
There are pros and cons for both business models, and the truth is, you can make money with either of them. But it really does depend on which is a better fit for you.
In this post, we will go through the main differences between the two…
What Are the Main Differences?
Affiliate Marketing is about earning commissions by promoting other people’s or companies products online. It’s more suitable to those that prefer the flexibility of promoting anything you want, without having to do any face to face sales. There is also no need to recruit anyone either.
With Network Marketing, you are promoting products from just one company. You will need to sell to people face-to-face, and to be successful you will need to recruit a team of effective consultants under you, to do the same thing.
I personally prefer affiliate marketing. We’ve tried both, but I’m not that inclined to do face to face sales, and I prefer the option to choose what I want to promote.
But don’t let that worry you, I’m not here to sway you either way. Some people love face-to-face sales, others don’t. We’re all different. I’m just going to share my thoughts on both business models, and hopefully it’ll help you decide which is best for you.
Let’s start with Affiliate Marketing…
What's Affiliate Marketing? & How Does It Work?
Affiliate Marketing is a fairly simple business model. It is where you earn commissions by promoting products that are owned by a company or another person. It’s a little bit like a refer a friend model.
There are no levels like with Network Marketing, there’s no need to recruit people, and there is no downline.
You just decide on which product to promote, sign up to the relevant affiliate program (which is usually free), start promoting that product, and then when people buy something through your affiliate link, you earn a commission.
The idea is pretty simple, but the execution does require time and effort if you want to master affiliate marketing. It’s definitely not a get-rich-quick scheme.
There are so many companies that work with affiliates, it would be impossible to list all of them. So, let’s go with the most popular example. And that is Amazon.
Amazon pays their affiliates up to 10% commissions whenever someone buys through your link, through a free program called Amazon Associates.
The advantage of joining Amazon is that they one of the largest marketplaces online, so have a wide selection of products, so can definitely cater for the majority of niches you might decide to start with.
Other examples of legitimate affiliate marketing companies include:
These are more commonly known as Affiliate Networks. By joining them you can access to 10,000’s of individual products from companies around the world. All in one place.
There are also may different ways to do affiliate marketing too. This brings a lot of flexibility, no just in the terms of what you actually promote, but also how you go about promoting those products.
I personally like the method where you setup a simple website to do affiliate marketing. That is because it doesn’t require any money to be spent on advertising. You just setup a simple blog, write useful content that attracts free traffic from Google, and then promote relevant affiliate offers to your visitors.
It’s a simple process, and the one we’ve been using for a while.
Related Post: Beginner’s Guide to Affiliate Marketing
But like I said, there are many ways of doing it. You could create a YouTube channel or use Paid Ads on Facebook. The options are limitless, and the basic priniciple is exactly the same: Choose a niche, signup with an affiliate network (free) to get your affiliate links, and then start promoting those products to earn commissions.
I’m not going to sit there and tell you that this is quick and easy. It is by far anything like that. It requires time to build up an authority, it requires a lot of effort to research and write helpful content. But in my experience, all that time and effort is totally worth it, i the long run.
Affiliate Marketing Pros
Here are some benefits about Affiliate Marketing…
- Affiliate Marketing is a simple, legitimate, low cost, and potentially lucrative business model. It is something that virtually anyone can be successful with, as long as they are willing to invest the time and effort required to see that success.
- You’re not tied down to one product range, brand, or company. You can promote virtually anything you like, from virtually any company online so long as they have an affiliate program (and most of them do). This gives you freedom and flexibility and means you’re not putting all your eggs in one basket.
- When you build an affiliate website, you’re building an asset. This is something that you one and one that is not tied to any individual company. Websites regularly sell for 20 to 40 times their monthly revenue. So even if your website is making $5K per month, you could sell it for a very tidy profit.
Affiliate Marketing Cons
Here are some concerns about Affiliate Marketing…
- Affiliate Marketing is more reliant on technology than Network Marketing. It’s not that hard to wrap your hear around, and building a website these days is very much like creating a social media profile. But there is still a learning curve at first when you first get started, and those who aren’t that used to using a computer.
- Creating content for your business requires time and effort. This includes blog posts, videos, social media posts, etc. If you don’t have the budget to go down the paid ads route, know that you will be sitting there creating a lot of content if you want to see results. Researching and creating content takes a lot of time, but it’s the only way of attracting people to your website. So, if you hate the idea of creating content, and you don’t want to pay for advertising, then this might not be for you.
- As an affiliate, you will typically be working from home, and on your own. This means you can, at times, feel isolated. It’s a lot of time sat in front of your computer. You can do that work from anywhere, as long as you have wifi. But for some people, this can mean a lack of social interaction, that you would usually get at a normal job, for example.
Who's Affiliate Marketing Best Suited For?
Affiliate Marketing is typically best suited to people who are wanting more freedom and flexibility in the way they run their business. You don’t have to handhold the transaction like you would in Network Marketing, so you can work when you want and how you want.
It is also ideal for those who want to leverage the internet, and who don’t like the idea of recruiting people.
We chose affiliate marketing, as it is a way of helping people without being too salesy. We can also work it in and around our other commitments. Gem runs a wedding business, and we have a son to care for too. So it’s ideal.
There’s also the fact that if you want to create a sellable asset, and develop a business that isn’t reliant upon any one company in the process, then this is the better option…
Recommended Post: Affiliate Marketing for Dummies – A Complete Guide to Affiliate Marketing
What's Network Marketing? & How Does It Work?
Network Marketing is similar to Affiliate Marketing, in the sense that you earn commissions from selling other peoples products.
But there are differences, the main one being that you don’t just earn commissions by selling products. You can also earn commissions from recruiting people, who then go on to sell the companies products too.
That’s one of the reasons that Network Marketing is also referred to as MLM or Multi-Level Marketing. This is because consultants can earn commissions on multiple levels. This is referred to as building your downline.
So, if you hired Bill as a consultant who sells products, then you would also earn a commission for any sales Bill makes. This is in addition to your own product sales. You can also build up a bigger team, and earn more commissions (in theory).
It is a little more complicated than that, but that is the general premise of MLM.
Each company you sign up with each have their own specifics on what the commission level is like, for both product sales and recruitment commissions. This will be set out in their compensation plan, and from my experience most MLM compensation plans are a little complicated to work out. But they will definitely be broken down between the two side; product sales and recruitment.
Like I said, each company has a different way of doing this. The Norwex compensation plan will be very different to the Tranont compensation plan, and so on.
In any case, the way MLM’s work in general is relatively simple.
The idea is to choose a company you want to work with, sign up and earn commissions when people buy through you directly, which is usually called direct sales. Then also earn commissions when you recruit new distributors or consultants, called residual commissions.
The more products you are able to sell, but typically the more people you can recruit, means the more money you can make. It is important to know that success within Network Marketing is usually based on how well you do with regards the recruitment side.
MLM compensation plans are usually geared up more towards rewarding your more for recruiting new distributors over selling the products. But this will also depend on how well your recruits do too.
Is MLM a Scam or A Pyramid Scheme?
There is a huge misconception around MLM. The biggest problem is the MLM companies themselves don’t do enough to get themselves away from that misconception.
The simple answer is that MLM is not a scam…
But the longer answer is… that it completely depends on the company itself, but it could be…
There’s a lot of confusion around this very topic. Many people do wonder what the difference is between MLM, Affiliate Marketing and a Pyramid Scheme.
Let’s get this cleared up now…
A Pyramid Scheme is a system where recruiting is the only option you have to make money. When someone joins the company they have to pay a fee, only to have to recruit others in the same business, who recruit more than people, and this goes on.
However, when this recruitment stops, the scheme will collapse and there will be no more money. There are also no products to speak of in a pyramid scheme. The only thing you are selling is the same opportunity that you just signed up for.
Pyramid schemes are illegal in the majority of countries. They are unsustainable, and very unethical. They eventually fall apart and the majority of people lose any money they have invested into them. This is because you need a continuous supply of new recruits, but the money always flows to the top. So, those at the bottom don’t tend to get anywhere anyway.
Affiliate Marketing is not a scam or a pyramid scheme. This is a much simpler business model as there are no levels, you only earn money when people buy real products or sign up for a membership.
Network Marketing or MLM is not a Pyramid Scheme or a scam either.
However…
Some MLM Companies Do Operate As A Pyramid Scheme… as they place too much emphasis on recruitment, and very little on the actual selling of their products.
The majority of their compensation plans do have short explanations for their retail commissions, but then they have several pages based on their residual commissions or recruitment.
There’s a very fine line between a legitimate MLM and a Pyramid Scheme.
My advice is to ensure you do your research thoroughly, as to which company is the best fit for you. Always look for companies that are selling high value products and services, and are more interested in selling their products, rather than being more focused on recruitment.
Related: What is the Difference Between Affiliate Marketing and MLM?
Network Marketing Pros
Here are some benefits about Network Marketing…
- Building up a large team of distributors, who you can earn money from, is a big selling point of MLM. This allows you to leverage the efforts of others to generate commissions. There is also a point where you could earn a decent passive income as your team continues to grow, and perform.
- If networking with other people, doing in-home presentation (house parties), and face-to-face selling is your thing, then MLM is probably the best option for you. This is definitely more about building relationships and selling to people.
- Most MLM companies provide self-development training, especially at their live events. Since developing a good mindset is definitely a part of being successful. Having said that, I do need to point out that there is, at times, a dark side to this. Some of the events are little cult-like, which is something I’m not keen on.
Network Marketing Cons
Here are some concerns about Network Marketing…
- Most MLM companies expect you to achieve a certain level of sales or points per month to qualify for commissions. This often leads to distributors having to buy products each month that they don’t earn enough sales. Even then, some will still expect you to buy products each month as well, classed as personal consumption. Prices can soon mount up if you aren’t making any sales quickly enough.
- Network Marketing is more focused on recruiting people into your “downline” than it is on actually selling products. The company still gets sales either way, as their consultants usually end up having to buy products like we mentioned in the point above.
- Often the products within MLM are usually more expensive that non-MLM companies, so earning money from selling products alone is very difficult. The real money is from recruiting.
- As a network marketer, you are restricted to promoting products from one single MLM company. This brings in a level of restriction, that I don’t personally like. It also means that you are putting all of your eggs into one basket, that company fails or doesn’t resonate with your network, then you will fail as well.
- Between 73% and 99% of people who join an MLM end up losing money. Part of this is down to them not knowing what to expect, or the person who has recruited them has not been completely transparent with them. But this is still a hard business model to get right, without the right support.
Who's Network Marketing Best Suited For?
MLM is best for people who the idea of networking with people, and building their business more of a team-based fashion. Those who like attending events, giving presentations, recruiting people, developing their team, and those who want to work with a specific company.
The most successful Network Marketers are those who know how to develop and motivate people, and sell the dream of financial freedom. When you get to the nitty-gritty, that’s what this is all about…
Recommended Post: How to Increase MLM Sales – Effective Tips to Improve Network Marketing Success
Affiliate Marketing Vs Network Marketing (Key Differences)
Let’s go through some of the key differences between Affiliate Marketing & Network Marketing, with a side-by-side comparison chart:
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Both Affiliate Marketing & Network Marketing allows you the opportunity to potentially earn good income over time. The amount of money you can earn will ultimately depend on how much effort you put in to your business, and how persistent you are. But that could be said for anything.
It is also a worthy point to mention that both business models have the potential to generate passive income for you. Which is money you make “passively” without trading your time, like you do with a normal job.
The only difference is the way you earn that “passive” income.
With Network Marketing, you earn passive income through building a team that can eventually sustain itself through your coaching and motivation. That way you can earn passive profits from the work your team does.
With Affiliate Marketing, you can generate long-term passive income. This is because you can create high-quality content that ranks within the search engines. This gives you the ability to get traffic for years. One blog post could go on getting you traffic and earning you income for years to come.
Those are the key differences between the two…
My Personal Thoughts on Both...
We tried Network Marketing, when we were in our twenties, and for us, it wasn’t right for us. At first, it looked like a good opportunity, but the more we got into it, the more we disliked it.
I’m not going to go into the details of the company we tried, but it honestly felt more like a religious cult, than a chance to become an entrepreneur. All we wanted to do is run our own business selling real products. But they just solely focused on recruitment, and selling the dream of changing their life.
We also found it almost impossible to make money, and we couldn’t afford to keep spending to stay “qualified”.
The reason was, in order to be successful, we were told to contact everyone we knew and start conversations with random people, all with a hidden agenda of recruiting these people into our team.
Don’t get me wrong, there were certain aspects we enjoyed and we learned some good stuff that helps us now with our current businesses.
But I personally just wanted to sell products that people would find useful or actually wanted, without facing constant rejection. And without attempting to convince people to join an “opportunity” we weren’t even making money with ourselves.
How can you convince people to join, when they ask “how much are you making?” It just didn’t feel right.
We gave it up, and went back to focusing on our day jobs. But I still wanted to create a passive income, and spend more time with the family, so I did keep on looking for an opportunity.
Fast forward to 2016, and I started learning Affiliate Marketing…
And we’re so glad we did. Because for us, it was completely more suited to us. Now we earn commissions selling products people are already buying online, we don’t have to recruit anyone, and we let our websites do the talking, meaning we don’t need to speak to our family or friends, or anyone for that matter to sell these products.
I have people coming to our sites and buying stuff through my links everyday, without ever having to speak to them. I also feel really good about what we do, as we are helping people with their decisions and not hard selling things to people. These people are already interested in the product, they just want some help deciding on whether it is the right product for them, and we help them with that as part of our website.
It’s paid off top, thanks to the training in our top recommended training we are earning a 4-Figure Monthly Passive Income Stream.
That’s our journey though, and that doesn’t mean it’s the right path for you. There are those that love Network Marketing, and they also utilise internet marketing to help grow their business with it too.
It totally depends on picking the right network marketing business for you, and then how driven are you to making it work for you…
Related Post: Why Affiliate Marketing is 100x Better than Any MLM!
What If Neither Business Model Interests You?
If you are sitting there thinking that neither Affiliate Marketing or Network Marketing/MLM sounds right for you, then don’t worry. There are other options out there that might suit you better.
For example, you could sell a service on Upwork as a freelancer, start a dropshipping business, or you could sell physical products through the Amazon FBA program.
Any of these could work.
Selling a service on Upwork is a good place to start, as you can tap into an existing customer base. See what others are offering, and then just provide a better service than the others. Dropshipping is an affordable way of selling physical products, as you don’t require storage space for products.
Selling on Amazon is a higher cost business, but can be very lucrative if you choose the right products.
These are just a few examples of ways of making legitimate ways to make money online. The point is, that you don’t have to just limit yourself to only one of them. You can start with the one that suits you, then expand into others as you want.
Conclusion
Both Network Marketing (MLM) and Affiliate Marketing are legitimate business models, that allow the average person to create a good income stream and lifestyle.
Whether you’re successful or not, will depend a lot on how much time, effort and perseverance you put into your business. You’ll also need to remain consistent as you build up your business, and get it to the point where you are earning an income from it.
With that being said, we’ve gone through the key differences between the two, and some pros/cons that you should consider, with both business models.
That way you can choose the right one for you…
The bottom line is that it will come down to your own personal preference as to which direction you choose to go down. It will then depend on your effort as to how successful you are.
Hopefully, you’ve found this article useful, but if you have any questions, or maybe you want to share any experiences you have had with either business model, then please write to us in the comments section. We’d love to hear from you. 😉
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