As more and more people are shifting their attention to finding ways to earn money online it has paved the way for many fraudsters and scam companies to come into action. This is the reason it becomes extremely important to research the results before you consider opting for one of the many money-making resources. Affiliate Marketing and Multilevel Marketing (MLM) are two of the most popular marketing strategies out there that you will come across. Both have the ability and potential to make money as well as risks and vulnerabilities involved. But which one is better? What is the difference between Affiliate Marketing and MLM?
In this article, we will explore the definitions, differences, and pros and cons between Affiliate Marketing and Multilevel Marketing. This will help you determine which one is more effective to work with.
What is Affiliate Marketing?
Affiliate Marketing is a type of marketing where you promote other people’s/businesses products or services and earn a commission when someone buys through your link.
It is performance-based marketing in which a business/retailer rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.
Affiliate Marketing is also known as ‘Referral Marketing’ and is also part of the overall Digital Marketing process.
What is Multilevel Marketing?
Multilevel Marketing, on the other hand, is a type of marketing where you recruit people to join your team, and earn a commission when they sell products or services.
It is a type of direct selling in which independent salespeople sell products to customers, and also recruit and train other independent salespeople to do the same.
MLM is also called ‘Network Marketing’ and many MLMs are termed Pyramid Schemes owing to their business model.
So, what is the difference between Affiliate Marketing and MLM?
There are several key differences between Affiliate Marketing and Multilevel Marketing. Let’s look at them one by one:
Joining criterion –
Affiliate Marketing programs are completely free to join. You can start doing affiliate marketing by joining multiple affiliate networks absolutely free.
Although some popular affiliate networks prefer approving affiliates with established online authority, it is not obligatory.
To join a Multilevel Marketing program, you have to spend money on enrolment fees and other business packages. You will hardly find any MLM program that is free to join.
MLMs are also country and region-specific so it is possible that you may not be able to work with your desired MLM company.
Learning process –
Affiliate Marketing’s definition is very simple but it involves a learning curve which is important from a financial success perspective.
There are several elements such as building a website, driving traffic, writing content, etc. that one needs to learn and implement properly to reap rich rewards.
The same goes for Multilevel Marketing. The training and education are necessary to improve your sales and business growth skills.
Almost all the MLM companies do offer learning stuff through dedicated resources or through the person who referred you to the MLM program.
Investment factor –
With Affiliate Marketing, you will have to spend some money on hosting services, and researching aspects if you want to own a website.
Although, you can also promote the products and services by posting your affiliate links on your social media platforms, YouTube channels, or on others’ blogs free of cost.
If you are completely new to the process, you may have to spend some $$$ in learning the process by purchasing/subscribing to Affiliate Marketing courses.
Multilevel Marketing on the other hand primarily runs on your investment. As a member of an MLM company, you are bound to purchase products at discounted prices to sell them to your customers.
You are also required to purchase a certain volume/value of products regularly to keep your membership active.
Plus, there will be running costs associated with your traveling, gasoline, etc for marketing efforts. Some MLM companies also charge annual membership fees and business tool maintenance costs from their members.
Promotional aspects –
Affiliate Marketing relies on your promotional skills. With this business model, you remain in control of how you want to promote your products/services.
As mentioned above, apart from owning a website, you can promote products/services via your affiliate links on various channels and platforms.
You can also make use of other digital marketing sources such as email marketing. You don’t need to travel or have a physical presence for selling these products/services. The best part is you can track your sales, and conversions through your affiliate networks resources.
Multilevel Marketing works on selling and recruitment processes. You need to sell the products face-to-face or through other online medium sources such as social media.
Some MLM companies offer a virtual back-office to promote their products via a replicated website. This way you can promote and sell the products online to earn commissions.
But your main source of income lies in the recruitment of people. This is the most tedious part of every MLM that rewards its members for constant networking and building a team of people by sharing their products.
Financial outcome –
With Affiliate Marketing, every time a person clicks on your affiliate link and purchases the product or joins the service, you earn a certain percentage of commission from your affiliate partner.
The percentage may vary with every affiliate network but your commissions are straightaway accrued in your affiliate account.
The accrued commissions are paid according to your affiliate partner’s payments terms and conditions and there are no surprises here. You can also boost your earnings through paid ads (Cost Per Click) in the form of Google AdSense, etc.
With multiple sources of promotion, 1000s of products/services to promote, and versatile resources to earn you can expect to make 5-6 figures income every month.
As for Multilevel Marketing, your commissions are paid on the number of actual products you sell every month. Some MLMs offer payments weekly, and bi-weekly that may vary according to the compensation plan however, there is no money if there are no sales.
Secondly, MLM members are paid bonuses, and incentives on the number of people they have under their team and the products purchased/sold by them.
You can expect to earn a 5-figure monthly income provided you keep selling the products and recruiting team members consistently.
As you can see, Affiliate Marketing is an open resource with unlimited opportunities as compared to Multilevel Marketing which is restricted and highly demanding when it comes to making money.
The Pros and Cons of Affiliate Marketing
- Affiliate Marketing is free to join. This makes it a low-risk opportunity where you don’t have to pay anything upfront to start working. The only cost associated with is if you own a website.
- Affiliate Marketing offers a wide range of products and services to promote. You can find many companies with affiliate programs that have millions of products. Some of the examples are Amazon, Walmart, Etsy, eBay, etc.
- Affiliate Marketing promotional resources are many. As an affiliate marketer, you can share your affiliate links on your social media profiles and videos. You can also create a YouTube channel free of cost explaining the products you want to promote with your affiliate links.
If you own a website, you can also opt to send emails to your subscribers sharing your favorite products.
- With Affiliate Marketing, there are no restrictions on your earning capacity. Since the business model is risk-free and legitimate all around the world, you can join the affiliate programs of any company outside your region and earn commissions in local currency.
- Affiliate Marketing gives you the freedom to work and live. There is flexibility to work at your own schedule and hours as well as work from anywhere. Consistent involvement of 3-4 hours every day can fetch you good financial results each month.
- Affiliate Marketing involves constant learning. The business model is dependent on many online resources such as search engines, promotional tools, and learning materials. Learning about these resources and gaining access to some of the tools/materials can cost you extra money.
- Affiliate Marketing is an ideal way of making money online only for people who like to learn and implement the process. There is no money if you cannot work hard, remain dedicated, and be persistent. Affiliate Marketing does not work for people looking to make quick money in less time.
The Pros and Cons of Multilevel Marketing
- Multilevel Marketing companies offer generous compensation plans. These plans are workable if you happen to join the company in its initial phase. This will help you gain momentum to achieve the requirements of the MLM compensation plan. You can attract more customers and members under your influence to achieve higher rankings as a member.
MLMs are designed to reward with perks, incentives, and bonuses to people sitting at the top level. Being at the top, you can enjoy residual income for the years to come.
- One of the pros of joining an MLM company is enjoying products at a discounted price. As a member, you can order products regularly at discounted pricing to use them. MLMs do offer multiple subscription options to become its member and use the products and services at lower pricing.
It is only when you want to participate in its compensation plan that requires you to purchase and sell products forward and recruit people.
- With Multilevel Marketing, you get many options to promote the products. One way is to use the resources offered by the company itself. Many MLMs offer a duplicate website to take orders online. This gives you the flexibility of working online from home and earning money. You can also use your social media profiles as well as create videos and personal blogs to promote the products.
- Multilevel Marketing programs are costly, to begin with. It involves lots of money on joining, product purchasing, and enrolment kits to start working. This makes it a high-risk opportunity as you may lose a significant amount of money in case you fail to achieve the company’s requirements.
- With Multilevel Marketing, you have a limited line of products to promote. As an MLM member, you are obliged to promote only those products that are offered by the company. This will limit your promotional capacity and you will have to focus only on the products that are highly rated and reviewed by their users.
On top of that, a majority of MLM companies offer similar products with different names and labels which makes it a highly competitive industry to work with.
- Multilevel Marketing is a limited earning opportunity. The earnings are restricted to the compensation plan offered by the company. Although the compensation plans are often generous on paper it has been evident from various online resources that earning money is quite difficult and remains limited to the commissions offered on product sales.
- On the accessibility front, Multilevel Marketing programs are banned in several countries around the world for their legitimacy. The business model is highly criticized for being a pyramid scheme and luring individuals with fake income claims. Many MLM companies have faced several lawsuits and paid millions of dollars to settle them.
Thorough research, compliance, and caution are a must when you consider joining an MLM opportunity.
Conclusion: So, which is better? Affiliate Marketing or MLM?
The answer depends on what you are looking for. Multilevel marketing does have a few advantages, such as the promotional aspects, and finding products at discounted pricing, but these are outweighed by the disadvantages.
The start-up cost, sales, recruitment, networking, promotions, and traveling are all required on a consistent basis to be successful.
There are people who have successfully made money and still making money with MLM programs but these are far and fewer. Our online research says that such people have spent years working and spending money to earn their dream income.
If you are someone who likes selling and are good at networking to build a team of people then MLM is a good choice. The success will come but not after you have spent a considerable amount of time and money.
In my personal opinion, Affiliate marketing is better than Multilevel Marketing for a few key reasons: it is a low-risk way to start and expand your marketing efforts, and it can be an effective way to reach new customers.
You have nothing to lose until you earn your first sales commission. Affiliate Marketing can earn you an unlimited amount of money owing to unlimited opportunities, and unlimited products/services.
You don’t have to own/store any of the products and are free to work as per your own schedule, and location. The financial outcome is proven and superior to Multilevel Marketing. However, the success is purely on your learning, implementation, and consistency efforts.
If you are looking to make a lot of money, then Affiliate Marketing is the better option.
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