If you have considered making money online, at some point, you must have come across affiliate marketing and network marketing as viable options.
At the basic level, the two are very similar. The two involve assisting companies in marketing their goods and services. If done correctly, network and affiliate marketing can be exciting approaches to monetizing your skill and interests.
However, there are significant variations between the two. Of all the variations that matter, I will assume that the pay matters the most to you.
So, in this article, I will show you the positives and negatives associated with each option. That way, you will better understand which one will work best for you.
Let’s get into it, shall we?
Key Differences Between Affiliate Marketing and Network Marketing
|Affiliate Marketing||Network Marketing|
|You make money by promoting a product you don’t own.||You make money building a network of distributors as well as promoting the products.|
|You get paid a commission per sale (it is performance-based).||You get paid in tiers based on your network of distributors’ collective efforts.|
|You don’t need any amount to get started||You are charged a fee to join an MLM program which is mostly referred to as the starter kit.|
|There are countless numbers of affiliate programs and niches you can select from.||There are not so many MLM programs to venture into (popular niches are health and wealth niches)|
|Popular promotion channels include paid ads, and organic content marketing via blogs, social media, etc.||It requires social marketing – word of mouth, referral marketing, etc.|
|There are lots of affiliate products and opportunities for anyone to promote.||It is quite hard to build up a network of marketers, the most income is earned by the early network marketers.|
What is Affiliate Marketing?
Affiliate marketing is a kind of passive income job that enables you to promote the product or service of a third party and earn a commission. Commissions are usually paid if that third party’s goods or service is purchased using your referral link.
Affiliate marketing usually involves two parties; the affiliate and the company that needs promotion.
These companies can be retail enterprises, travel, e-commerce, financial services, gaming, software development, etc.
Affiliates are the individuals or companies that advertise on behalf of the company that needs to promote their service or product.
At the start of the affiliate program, the affiliates sign up for the company’s affiliate program. The company then gives every affiliate a unique link with which they can track the number of customers the affiliate influences to make a purchase.
The affiliate can then decide to share their link with their audience on social media, their blog, podcast, or whatever platform they choose. As customers make purchases using the affiliate’s link, the affiliate will receive commissions.
Commissions are usually a percentage of the total cost of the product. Most affiliate products have commissions between 10% and 20%. However, some unique products pay affiliates as much as 50%.
Affiliate marketing is usually profitable for people who have a good understanding of how to generate traffic whether through Search Engine Optimization (SEO) or paid advertising. Such affiliates can create contents that rank well in search engine results.
You may compare the affiliate to a kind of intermediary if you like.
For instance, if you want to start an affiliate marketing business on carpets. So, you write blog articles about carpets with your unique link.
Someone stumbles on the post and clicks your link to buy the carpet. As a result, you get 10% of the money they pay for the carpet. This is an example of affiliate marketing in its most basic form.
To tell you the truth, I believe that being an affiliate is an excellent method to generate passive money, and it is also a straightforward way to get started.
There is a wide variety of affiliate programs to choose from, and new affiliates may often begin earning commissions with no initial financial outlay required.
What is Network Marketing?
This is a model of doing business that involves making sales through the use of a network of distributors. It requires systemic tactics like management, lead generation, and hiring, among others.
This marketing technique relies on a network of distributors rather than directly selling the items to retail outlets like shops.
The first step for businesses is to find customers interested in the things they provide. As an alternative to a commission-based model, the items are supplied to the distributors at a discount. The distributors are responsible for selling the products at the full market price.
Distributors are also encouraged to recruit other new distributors, generally known as downlines. In exchange for their efforts, downlines are awarded a share of each transaction that is generated.
The recruiters can recruit their own new distributors, leading to the establishment of a network of distributors.
Simply put, you will contribute to promoting and maintaining a service or product by becoming a member of an existing team and organizing a sub-team of your own.
Everyone who is a member of this network is striving to promote the same item, and the majority of the time, you will be employed by someone who is already a part of the network marketing program.
Is Network Marketing a Pyramid Scheme?
Network marketing is often referred to as both “multi-level marketing (MLM)” and “pyramid schemes.” In basic terms, MLMs and illegal pyramid schemes work with similar concepts.
However, pyramid schemes create negative impressions and are mostly regarded with contempt and fraud.
Multi Level marketing is lawful; however, pyramid schemes are illegal in some countries.
A pyramid scam is a false and unsustainable investment proposal that promises impossible profits. Early investors get these substantial returns, prompting them to encourage the venture to others.
Current investors are paid with the incoming funds from new investors. Eventually, it becomes impossible to find fresh investors, and the pyramid falls.
In a version of the pyramid scheme, investors at each level charge initiation fees paid by the subsequent tier. Some of these fees are distributed to those at the top of the pyramid. Eventually, no recruitable individuals remain leading the pyramid to crash.
Pyramid Shemes. Source: Pixabay
Pyramid schemes work with the MLM strategy of network marketing. However, the difference between a pyramid scam and a legal MLM program is that a pyramid scheme does not sell a legitimate product.
In pyramid scams, the focus is on recruiting new members. Participants strive to earn money primarily via the recruitment of new members.
The defining characteristic of these schemes is the promise of sky-high profits in a short amount of time in exchange for nothing more than turning over your money and recruiting others to do the same.
Rarely is the sale of a product or service involved, although this may have been inferred to attract new members. There is no other recognized source of revenue than those recruited.
Affiliate Marketing vs MLM: Understanding the Difference
Having said that, multi-level marketing (MLM) is not the same as affiliate marketing.
Unlike in MLM, affiliate marketers decide for themselves the goods they will market and are paid a commission for each sale they generate.
This money is given to the affiliate by the retailer or company as compensation for the affiliate’s contribution to increased traffic, sales, or recommendations. No network recruitment takes place in this process.
In addition, there are no initial costs required to sign up for an affiliate marketing network. As long as you plan to advertise other products, you can start doing so without incurring any costs.
This tactic is considered by many to be very lucrative. Plus, the connection between the company and its individual affiliates is advantageous for both parties.
Benefits of Affiliate Marketing vs MLMs
The following are some advantages that make affiliate marketing better than MLMs
1. You may choose which products to sell based on your own preferences.
Control is one of the perks associated with affiliate marketing schemes. You may choose which businesses you want to collaborate with and whose goods or services you wish to promote.
This gives you the option to concentrate on goods about which you are really enthusiastic and interested. When you choose products you truly use, you can assist customers in making educated purchasing choices.
However, with network marketing and MLMs, you can only sell the items selected by your parent firm. If you are not interested in these products, you may find it hard to make money. This is because it would be tough to sell something you do not believe in.
2. There is no membership fee, and you earn a commission on every sale.
Typically, MLMs need membership fees and other initial expenditures. Most participants must purchase a starter kit containing the items they are expected to sell. That is you need to pay network marketing companies to promote their product
Despite the fact that promoters often obtain discounts on these items, the amount typically only covers the cost of membership in the network.
In contrast, affiliate marketing is free to join. You will get a commission for each affiliate sale you generate, and you can monitor your affiliate earnings as you continue the business.
3. You Have Complete Authority Over Product Promotion
Affiliate marketing programs track the sales of their members using unique tracking links. Brands can determine how clients came to their websites and provide credit to the promoter who sent them traffic.
Therefore, there are a variety of affiliate marketing advertising techniques available. Almost wherever you may put your link is a potential alternative, so long as you do not send unsolicited emails or comments (or go against affiliate conditions). Websites and blogs, product reviews, social media, and videos are among the most popular forms of media.
You may insert affiliate links in the video description on YouTube, making it a popular venue for affiliate marketing advertising.
Affiliate marketing may be conducted online, as you can sell to anyone. Although many MLM members may generate sales this way, most of their income is generated via direct interactions.
Therefore, you will spend more money on human engagement to expand your network. Frequently, this involves strategies that others find irritating.
With affiliate marketing, you only communicate with those likely to be interested in your items. With an affiliate website, for instance, you may improve your content to attract visitors who are shopping for items in your field.
4. Monthly Quotas
The nice part about affiliate marketing is that if you have a sluggish month (no sales), nothing will happen. You cannot be demoted or terminated since there are no ranks and you are not an employee.
You will be your boss with no monthly quota or sales to worry about. The only disadvantage is no money for the month.
However, network marketing requires distributors to meet a minimum sales quota, known as the qualifying or personal volume. One must match market demands or risk losing commissions, being demoted, and being fired. Sometimes, some marketers have to buy their products to avoid losing their jobs.
Advantages of Network Marketing over Affiliate marketing
Network marketing can also have several benefits. The following are some of the main advantages it has over affiliate marketing.
1. Team Effort
With network marketing, you don’t earn from your efforts alone but also from your team’s efforts as a whole.
Money from network marketing is generated when a marketer directly enrolls new colleagues, and the cumulative volume of the marketer and his team generate their profits.
This residual revenue earned via teamwork is often rewarded by the MLM organization with automobile incentives or exotic holidays across the globe for its employees.
2. Cold Market Versus Warm Market
Since most of your target audience may be comprised of website visitors, the same people may click on the advertisements on your site. This audience is primarily a cold market since the affiliate marketer is unfamiliar with them.
In Network Marketing, your first target audience consists of warm market members such as friends, family, and coworkers.
Sometimes, the target audience might originate from external sources comparable to affiliate marketing.
However, this style supports a more organized relationship-based approach to recruiting prospects.
How much does an affiliate marketer earn?
Earning potential in affiliate marketing is primarily dependent on your efforts.
You may earn a few hundred dollars per month or thousands per day, depending on the amount of work you put out and the size of your audience.
You must examine the commission rates and conditions of each affiliate network you join to appropriately estimate your prospective earnings.
In general, though, the greater your audience, the more sales you will generate and the more money you will earn.
The good thing is successful affiliate marketers share their earnings online. That way, you can be aware of how profitable the business is.
The following are some of the top earners in affiliate marketing and how much they earn.
John Chow is one of the big names in affiliate marketing, and he makes over $40,000 every month.
Source: John Chow
The following image shows how much the top affiliate 50 influencers made from affiliate marketing in 2021, according to Forbes.
It is also crucial to know that many affiliate networks provide recurring earnings, allowing you to continue earning money from the same consumer even after completing their original purchase.
This is a fantastic method to create passive income, and it’s one of the primary reasons I advocate affiliate marketing to anybody seeking to earn money online. You can check out my thoughts on how affiliate marketing can make you rich.
How much does a network marketer earn?
The earning potential of network marketers depends on their ability to recruit and grow big teams.
In a legal network marketing organization, you earn a commission on every product sale your team generates, in addition to your own sales efforts.
The following is a list of the top 5 earners in network marketing in the world.
Source: Business for Home. Org
While the first five may seem like network marketing pays more, however, going down the list, you will see that others earn an average of about $250,000 monthly. You can see that below.
Source: Business for Home. Org
To make as much money as these people, you must contact everyone you know to sell them items or attract them into the company.
You will also need to stay active on social media, often posting about the items or services you are marketing, which is your primary source of lead creation.
Consequently, you will want far more human engagement than affiliate marketers.
In conclusion, network marketing firms may be an excellent method to generate residual income, but only if you are ready to sell items, recruit people, and expand your social network.
Affiliate marketing vs Network marketing – which is easier to learn?
Unlike network marketing, you can start your affiliate marketing business with little to no money at all. You also do not need that many human connections or direct marketing as there are several ways to drive traffic online.
However, network marketing emphasizes client sales, which needs salespeople to interact directly with individuals. It focuses primarily on sales made directly from customers to other customers.
As a result, you may want to understand how to interact with people and acquire some social marketing skills to do well in network marketing. Also, research by the FTC shows that over 95% of network marketers quit in 10 years.
Affiliate marketing isn’t also as straightforward and also takes time to start making some money especially if you are starting from scratch online. However, it is easier to learn for anyone.
Wrapping things up
So, which do you think is better? network marketing or affiliate marketing?
In terms of income, network marketing has more income potential for the long term. The money you can make from network marketing cannot be matched by the affiliate marketing model.
This is because affiliates only make money according to their individual efforts, network marketers, however, can combine the efforts of their teams.
That said, anybody with a work ethic can be successful in either model. Network marketing gives you a slow source of income that might give you more money as you get more recruits. Affiliate marketing, however, offers a short-term or rapid strategy for earning an online income.
If you wish to offer several products using your own website or digital marketing tactics, you should use the affiliate business model. Compared with an MLM program or network marketing organization, you do not need much money to start.
It is essential to remember that network and affiliate marketing are businesses, and therefore, like any other business, they require time to flourish.
Is MLM and network marketing the same?
Yes, they mean the same thing. MLM is an acronym for multi-level marketing which is the same thing, so do not get confused by the terms.
Is affiliate marketing a networking program?
No, affiliate marketing is not a networking program. However, an affiliate company can build a network of affiliates but they are independent of one another and one person’s commission isn’t tied to another. It is an individual performance-based program.
Can affiliate marketing be a career?
Yes, affiliate marketing makes a good career. If you are looking for a detailed answer, I covered why it makes for a good career here.
Which affiliate network is the best?
There are lots of affiliate networks and they all have their restrictions and shortcomings. So, this is a tricky question to answer. For some, it would be Clickbank, but Clickbank doesn’t accept all countries. Other popular affiliate networks include Shareasale, Commission Junction, Amazon, etc.
What do MLMs call themselves?
You may be referred to as “distributor”, “participant”, or “contractor” by the MLM company you join. But in several other places, you will mostly be referred to as a “network marketer”.