Many people aren’t sure what the difference is between affiliate marketing and network marketing, and which business model is better. And unless you ask someone who has done both, you’ll probably get a fairly unhelpful, one-sided answer.
I’ve tried both. And the conclusion I came to was that there are pros and cons to both. The truth is, you can make money doing either, so it really depends on what suits you.
What are the main differences?
Affiliate marketing is about earning commissions promoting other company’s products online, and it’s more suitable if you prefer the flexibility to promote anything you want, without doing face-to-face sales and without recruiting anyone.
Whereas, on the other hand, network marketing is more about promoting one company’s products, selling to virtually everyone you meet, and recruiting a team of consultants under you, who do the same.
I personally prefer affiliate marketing. After trying both, this is what I ended up settling on and building my business around, it just suits me better and I very much prefer it.
But don’t worry, I’m not here to try to “sway” you one way or the other. I’ll just share my thoughts and feelings about both business models, to help you decide for yourself.
Let’s start with affiliate marketing.
What Is Affiliate Marketing and How Does It Work?
Affiliate marketing is a simple business model where you earn commissions promoting other company’s products online.
There are no “levels”, you don’t have to recruit anyone, and there is no downline.
You just choose a product, start promoting it, and when people buy something through your affiliate link, you earn a commission. It’s really that simple. But obviously, if you want to be successful, it takes time and effort to master affiliate marketing.
So it’s not a get-rich-quick gig.
Examples of companies that work with affiliates are practically endless. But probably the most popular example is Amazon.
Amazon pays their affiliates up to 10% commissions whenever someone buys through your link, through a free program called Amazon Associates:
Other examples of legit affiliate marketing companies include ClickBank, CJ Affiliate by Conversant, and ShareaSale. These are sites you can join, and get access to promote 10,000’s of individual products from companies all over the globe. All in one place.
There are many different ways to do affiliate marketing too. So there’s a lot of flexibility not just in terms of what you promote, but how you go about promoting it.
I personally like the method of affiliate marketing where you set up a simple website. Because it doesn’t require you to spend money on advertising. You just set up a simple blog, fill it with useful content to get free traffic from Google, and promote relevant affiliate offers to your visitors. It’s a simple process and it works.
Other methods include creating a YouTube channel or running paid ads on Facebook for example. But the basic premise is always the same. Choose a niche, signup with an affiliate network for free to get your links, and start promoting to earn commissions.
Don’t get me wrong, it does take time and effort to be successful, like anything worthwhile. But in my experience, it’s well worth it in the long run.
- Affiliate marketing is a simple, legitimate, low cost, and potentially lucrative business model. And it’s something virtually anyone can be successful with, as long as you’re willing to put the time and effort in.
- I like that you’re not locked into promoting one product, brand, or company. You can promote virtually anything you want, from virtually any company online who has an affiliate program (most of them). Which gives you freedom and flexibility and means you’re not putting all your eggs into one basket.
- When you build an affiliate website, you are building an asset. One that you own and one that is not tied to any individual company. And one you can sell. Websites regularly sell for 20 to 40 times their monthly revenue. So even if your site is making $5k per month, you could sell it for a tidy profit.
- Affiliate marketing is a lot more reliant on technology than MLM. It’s not hard to wrap your head around, and building a website is actually very easy these days, but there’s still a bit of a learning curve at first for beginner’s who don’t normally use a computer.
- Creating content (videos, social media, blog posts) takes effort, time and persistence. And unless you have a decent advertising budget, this is what you’ll be doing on a regular basis to attract people to your site. So if you hate the idea of creating content, and you don’t wanna do paid advertising, this isn’t for you.
- As an affiliate, you typically work from home, on your own, so it can sometimes feel a little isolated. There’s no need to do anything in person, so if you’re used to working and thriving in a busy/ social environment, this is not that.
Who’s Best Suited to Affiliate Marketing?
Affiliate marketing is probably best suited to people who want more freedom and flexibility in the way they run their business. It’s also better for people who want to leverage the power of the internet, and who don’t like the idea of recruiting people.
Not to mention, if you want to create a sellable asset, and develop a business that is not reliant upon any one company in the process, then this is the better option.
What Is Network Marketing and How Does It Work?
Network marketing is similar to affiliate marketing, in that you earn commissions by selling other people’s products.
But it’s different because you don’t just earn commissions on products people buy through you directly. You also earn commissions when you recruit people, who sell products.
This is why network marketing is also referred to as multilevel marketing (or MLM for short). Because consultants earn commissions on “multiple levels”.
For example, if you recruit John and he goes out and sells products, you will earn a percentage of whatever he sells. In addition to your own product sales.
It is a bit more complicated than that, but that’s the general overview.
The specifics on the different ways you can earn, and how much, is set out within the company’s compensation plan. Which differs from company to company.
In any case, the way MLM works, in general, is pretty straightforward.
The idea is to choose a company you want to work with, sign up and earn commissions when people buy through you directly (direct sales). And when you recruit people who do the same (residual commissions).
The more products you sell, and especially the more people you recruit, the more money you will make. Success in network marketing largely comes down to how many people you can recruit, and how successful they are. So it’s very much about team building.
Is MLM a scam or pyramid scheme?
The simple answer is no.
The longer answer is… it can be, it depends on the company itself.
There’s a lot of confusion around this. Many people wonder what the difference is between MLM, affiliate marketing, and a pyramid scheme.
So let’s set the record straight…
A pyramid scheme is basically a system of recruiting. Where someone joins a company for a fee, then gets paid to recruit others into the same business, who recruit more people, and so on, multiple levels deep. There are no real products being sold, the whole thing is just about getting paid to recruit new members.
Pyramid schemes are illegal in many countries, unsustainable, and very unethical. And they eventually fall apart and most people end up losing money. Because there’s an ever-increasing need for new people to join the scheme, to make money for those at the top.
Affiliate marketing is not a scam or pyramid scheme. Because there are no levels, you only earn commissions when people buy real products through you directly.
And network marketing/ MLM is not a pyramid scheme or scam either.
However… some MLM companies do operate as a pyramid scheme by placing too much emphasis on recruiting, and very little on selling quality, retail-worthy products. Which was the case with Vemma, an example used in the above YouTube video.
Honestly, there’s a fine line between a legitimate MLM and a pyramid scheme.
So it pays to do your research as to which company you get involved with. Always look for companies that are selling high-value products and services, as the basis of all income.
- Building a large team of distributors, who you can earn money off of, is a big selling point in MLM. Because it allows you to leverage the efforts of other people to generate commissions. And at a certain point, that could mean a decent passive income as your team continues to grow and perform.
- If networking with people, doing in-home presentations, and face to face selling is your thing, then MLM is going to be right up your alley. Because it’s very much a “people person” gig where it’s more about personal relationships than anything.
- Most MLM companies provide self development training, especially at their live events. And since developing a good mindset is a huge part of success, I think this is overall a good thing. However, at the same time, there is a dark side to this. Some of these events feel a bit “rah rah” and cult-like, which I’m definitely not a fan of.
- Most MLM companies require you to earn a set amount of “points” each month, to “qualify” for commissions and stay qualified. Which is tied to either selling products, or buying products yourself for personal consumption.
- Network marketing is more about recruiting people into your “downline” than it is about selling products. Often the products are more expensive than competing non-MLM companies, so earning by selling products alone is very difficult. The real money is made by recruiting.
- As a network marketing consultant, you are restricted to promoting the products of one single company you work with. I don’t like this because it’s restrictive and also means you are putting all of your eggs into one basket. If that company fails, so do you.
Who’s Best Suited to Network Marketing?
I think MLM is best for people who love the idea of networking with people and building their business in a more team-oriented fashion. Those who like attending events, giving presentations, recruiting people, and those who want to work with one specific company.
The most successful network marketers are those who know how to motivate people and sell the dream of financial freedom. That’s what this is all about when you boil it down.
Affiliate Marketing vs MLM (Key Differences)
In this section, I’m going to walk you through some of the key differences between network marketing and affiliate marketing, with a handy side-by-side comparison chart.
Network Marketing / MLM
|There is more location freedom with affiliate marketing allows you to work from anywhere you want. As long as you have a laptop and internet connection, you’re good to go.||Generally speaking, network marketing is more of a “work from home” gig, because you’ll be giving presentations, demonstrating products, and attending live events to build your business.|
|As an affiliate, you never need to recruit a single person. You only get paid when people buy products and services through your affiliate link, recruiting isn’t part of the equation||Network marketing/ MLM is very much about recruiting people into your “downline” so that you can earn a commission on their sales as well as your own.|
|Affiliate marketers are not tied down to promoting any one product. There are literally millions of products and services you can promote from virtually any company you can think of.||Network marketers are restricted to promoting the products their company sells. This means your entire business hinges around one single company, with one type of product.|
|Affiliates don’t rely on a team to build and scale a successful business. They primarily rely on their own efforts and outsource tasks when needed.||Network marketers are independent, but their income depends largely on the success of their team. Which means constantly motivating people to push forward.|
|Affiliate marketing is simple and so are the commission structures. You typically get paid a percentage of the sale or when someone completes a certain action, like creating a free account.||MLM companies use elaborate, confusing compensation plans that most people don’t understand. It’s nice that there are lots of different ways you can earn, but it’s far from simple most of the time.|
|There are networking events that affiliates can and do attend, but these are not essential and often reserved for higher performing affiliates.||MLM is very much about attending regular Live events, which aren’t free. These are viewed as essential and often involve a lot of motivational speaking. If you don’t attend, you might be seen as not taking your business seriously.|
|The cost to start a fully-fledged affiliate marketing business is very low. All you need is a free WordPress blog, a domain, and hosting. Or a free YouTube channel. You should factor in some costs for training and tools, but you can (easily) bootstrap your entire business.||Starting a network marketing business is often cheaper than starting a traditional business, but the costs are typically much higher than with affiliate marketing. Mostly because of the joining fees and costs of getting and staying “qualified”.|
|Affiliates never have to talk about their business to anyone if they don’t want to. In fact, you can run your entire affiliate business (relatively) anonymously if you want.||Talking with your family and friends (and everyone they know) is the bread and butter of network marketing. This is a bit cringe-worthy if you ask me.|
|As an affiliate, you own your website and you can sell it for as much as 20 to 40 times its monthly revenue. And if one product you’re promoting goes under, you can easily promote something else on the same site, without breaking a sweat.||With MLM, if you leave, or the company goes out of business, that’s it. You did not create a sellable asset and you cannot take your business with you if you leave. So if the company fails, so do you.|
As I mentioned earlier, both business models allow you to earn a potentially good income over time. How much money you make in either, ultimately comes down to the effort you put in and how persistent you are, like anything.
It’s also worth mentioning that both affiliate marketing and network marketing have the potential to generate passive income for you. Which is money you make “passively” without trading your time for dollars, as with a job.
It’s just that the way you earn that passive income is different.
With network marketing, you earn passive income by building a team that can eventually (all going well) sustain itself. And earn you passive profits as a result.
An affiliate site can also generate you a long-term passive income. Because when you create good content and that content ranks in search engines, you can get traffic for years to come. And when you have traffic, you can make money.
So these are some of the key differences.
In the next section, I’ll give you some insight into my personal experience in both MLM and affiliate marketing, and how it worked out for me.
My Personal Experience of Trying Both
I tried network marketing in my 20’s and I’ll admit, it wasn’t my cup of tea. At first, I thought it was cool but the further into it I got, the more I disliked it.
I’m not going to name a specific company, but it honestly felt like I was part of some sort of religious cult instead of being a real entrepreneur.
All I wanted to do was run a real business selling real products. But it was more about recruiting people and selling the dream of changing their life.
And I found it incredibly difficult to make money in MLM.
Because in order to be successful, I was told to contact everyone I knew and start conversations with random people. All with the hidden agenda of recruiting them.
Don’t get me wrong, there were some aspects I enjoyed. And most of the people I met were actually very cool, I enjoyed spending time with them.
But I personally just wanted to sell products that people wanted, without facing constant rejection. And without attempting to convince people to join an “opportunity” I wasn’t even making money with myself yet (lol). It just didn’t feel right.
Fast forward to 2015, and I started learning about affiliate marketing.
And I am so glad I did. Because to me, it’s just so much better. Now I earn commissions selling products people are already buying online, and I don’t have to recruit anyone or speak to friends, family, or strangers about my business.
I have people coming to my sites and buying stuff through my links all day every day, without ever speaking to them. And I feel good about what I do because affiliate marketing is more about helping people find great products than convincing them to join something. It paid off too because now I earn a full-time income online as an affiliate.
That’s me though.
It’s obviously not going to be like that for everyone. Some people love network marketing and some use the internet to generate leads and sales. So it really depends on the company, the individual, and how that individual builds their business.
What If Neither Business Model Interests You?
If neither of these business models interests you after reading this article, don’t fret. There are tons of ways to make money online.
For example, you could sell a service on Upwork, start a dropshipping business, or you could sell physical products through the Amazon FBA program. Any of these can work.
Selling a service on UpWork is a good place to start because you can tap into an existing customer base and just provide a better service than the next person. Dropshipping is an affordable way to sell physical products because you don’t need to stock any inventory. Selling on Amazon is a higher-cost business model but can also be very lucrative.
These are just some examples though, there are many other ways to work from home.
My point is, you never have to limit yourself to one business model or another. Do whatever you personally feel is right for you, because there are lots of options out there.
Summing It Up
Both network marketing (MLM) and affiliate marketing are legitimate business models that allow the average person to create an above-average business and lifestyle.
Your success in either of these ultimately comes down to how much effort you put in, and how consistent you are over time. Just like any business venture.
With that being said, there are some key differences, and pros and cons to consider, with both business models. And one will definitely suit one person more than another.
So it really comes down to your own personal preference as to what you decide to do, and how successful you’ll be, going forward. More than which type of business is better than the other. Hopefully, this article has given you some useful insight either way.