Affiliate marketing and network marketing are some of the most popular ways to generate income online. While they share some similarities, there are key differences between the two that set them apart which are worth noting. This article takes a look at the two, going into as much detail as possible to help you have a better understanding of how these opportunities match up and which might be the better one to invest in.
WHAT SIMILARITIES DO THEY SHARE?
If you have ever attempted to find opportunities that will allow you to work from home, chances are that you have come across affiliate marketing and network marketing opportunities as both allow you to do so.
Affiliate marketing and network marketing are business models where as a marketer, you work as part of an independent team. Companies opt to adopt these business models as they don’t have to invest too much in advertising costs or any other similar costs as they can simply rely on their sales representatives or affiliates (in case of Affiliate marketing) to sell or promote their products on their behalf.
Affiliate marketing and network marketing share the following similarities:
- Home business opportunities
Both of these opportunities allow you to work from the comfort of your home with a company as opposed to for a company.
- Flexible
You can control your schedule and work whenever you please. That said, how much you work will affect the amount of money you make from these opportunities.
- Low startup costs
Compared to conventional businesses, both affiliate marketing and network marketing have low startup costs, which partly explains their popularity.
- You don’t need to have your own products
Another attractive feature of both of these business models is that you don’t need to have your own products. You simply become part of the opportunity and start promoting the products you are presented with. Furthermore, you don’t have to worry about providing customer support or taking care of shipping and packaging costs. This makes it much easier to establish your home-based business.
WHAT IS NETWORK MARKETING?
Network marketing, often referred to as multi-level marketing (MLM), is a business model where you become part of the business opportunity as an independent distributor, after which you are required to build a network of distributors by recruiting other members beneath you, creating what is referred to as a downline.
Network marketing makes use of the direct selling business model, where distributors are required to sell products directly to consumers, which eliminates the need for retail stores or anything similar. As an independent distributor, you can purchase products from the company you are working for at wholesale prices and sell them directly to customers at markup prices, or you may have your own replicated website set up by the company where you refer customers to make purchases.
There are two main ways you can earn with this opportunity: selling products and by recruiting other members. You can earn money through recruitment because commissions in your structure are passed up. This means that if you bring in a new distributor, you will earn commissions based on their efforts to sell the company’s products, and if they recruit someone else, both you and the first distributor will earn commissions from the efforts of the second distributor. If the second distributor brings in another person, you, the first distributor, and the second distributor will earn commissions from the third distributor’s efforts to sell products and recruit other people.
The number of levels you are eligible to earn commissions from as a distributor varies greatly depending on the specific compensation plan in place as well as the company you work with. The structure used to distribute commissions to distributors also varies, but in general, network marketing businesses tend to have one of the following structures:
- Binary structure
- Unilevel structure
- Matrix structure
All these structures have a pyramid-like layout, where you bring in new members and they automatically go beneath you, and when they bring in new members, they go under them, and so on. The incentive for members to continue recruiting others is to earn commissions from your downline.
Network marketing business models are similar to pyramid schemes in the sense that they have a similar commission structure, but unlike the latter, members sell actual products to customers, which is what sets them apart. Genuine network marketing opportunities present customers with real products, and most of their revenue is sourced from sales they make to them.
It is quite common to find pyramid schemes disguised as network marketing businesses in which members are forced to buy products, and while the revenue from these opportunities still comes from the sale of genuine products, it isn’t considered as customers are pressured into making purchases. Most of these types of opportunities tend to mostly focus on the recruitment of new members rather than product sales.
GETTING STARTED AS A NETWORK MARKETER
Before joining a network marketing opportunity, it is important to do as much research as possible to find a genuine company that sells quality products. Keep in mind that you are expected to do direct selling, which means you will be tasked with convincing customers to buy what you are selling. For instance, you will want to avoid companies in niches that are overly saturated as you will have a hard time recruiting new members due to intense competition.
When you first become part of this type of opportunity, you’re usually required to buy some sort of starter kit that gives you access to a range of products you are supposed to sell as well as materials you will need to get started in the business, such as a replicated website, access to a back office, marketing materials, etc. Some companies may even go as far as providing you with formal training, or more commonly the person that brought you into the business will provide you with some coaching.
PROS
- No specific requirements to join
Anyone can become part of these opportunities as long as you live in an area where the company operates.
- Low startup cost
Most network marketing opportunities don’t require a lot of investment, although some need you to make very expensive purchases to become a distributor.
- Allows for flexibility
This is a type of earning opportunity that allows you to work in your free time when you’re starting.
CONS
- Low earning potential
There is a high likelihood that you will make little to nothing with this opportunity as it is structured in a manner that allows only a handful of members to earn a considerable amount of money.
- You have to pay to become a member
As previously mentioned, you are typically required to make some sort of purchase to become part of a network marketing opportunity. Some businesses may even require you to pay monthly.
- You need to constantly recruit new members
You will need some level of skill when it comes to recruiting new members to become part of the opportunity as it is one of the main ways you earn commissions.
- You don’t have a say in the products you are selling
You have no control over what you are selling as you are just an independent distributor. This means you have no control over the quality of what you are selling.
- It can take a while to build a customer base
It can take quite a while to recruit new members as well as build a reliable customer base.
START YOUR ONLINE BUSINESS TODAY!
WHAT IS AFFILIATE MARKETING?
As an affiliate marketer, you exclusively earn commissions when you make a sale. The basic steps of affiliate marketing are as follows:
- You promote products through affiliate links
- A prospective customer clicks on your link and is redirected to the page of the seller
- The customer buys the product
- You receive a commission
There are a variety of affiliate programs out there, with most of them paying their affiliates percentage commissions.
DIRECT AND INDIRECT AFFILIATE PROGRAMS
When you join a direct affiliate program, you sign up to become a member directly through them. On the other hand, indirect affiliate programs outsource the work to a given affiliate network which then finds affiliates on their behalf. Either way, the payment structure is more or less the same.
GETTING STARTED AS AN AFFILIATE MARKETER
There are multiple ways you can choose to promote the products you are required to sell. You can carry out promotions on your website, social media platforms, YouTube channels, and so on. Most affiliate programs usually require their affiliates to have their own website, with many of them providing you with instructions on how you can set up one that would help you sell their products.
Once you set up your website, you may need to create content that is related to the niche that you choose to focus on. Some affiliate programs may require that you have content and site visitors before you qualify as an affiliate, so it is important to go through the requirements for the programs you intend to join before becoming a member.
As an affiliate marketer, it is important to drive traffic to your platform as it will determine the sales that you make. There are a variety of ways to generate traffic. They include:
- Building an email list
Email marketing has been around for quite some time, but it is still one of the most efficient ways to direct traffic to your platform. To get started building your email list, you can use a lead magnet such as a free product, or you can opt to simply urge customers to sign up to receive regular updates. Once you have an audience, you can then push your content via emails in addition to sending them your affiliate links.
- SEO techniques
This is the methos I use to the exclusion of all others (at the time of this writing). This is a way to drive traffic by using search engine optimization (SEO) techniques. Some strategies you can use to improve your ranking on search engines include adding keywords on your sites using HTML headers and sourcing links from related platforms that are popular to your site
- Paid advertising
One of the ways you can get started with paid advertising is through social media platforms such as Facebook. You can also try using inexpensive banner ads on small niche sites.
PROS
- Higher income potential
When compared to network marketing, the earning potential working as an affiliate marketer is higher, especially when you find a genuine company that pays high percentage commissions.
- Low startup cost
The cost of getting started will depend on the affiliate marketing program you choose to work with, as well as how you choose to go about it, but it is generally low.
- Flexibility
Like with network marketing, affiliate marketing allows you to control when and how much you work.
- More options when it comes to products
You have more options when it comes to the products that you promote as an affiliate as there is not as much limitation as with network marketing.
CONS
- It can take a while to establish your business
Just like with network marketing, it can take a while before your business gets going and you start earning steady commissions.
- No guaranteed income
Unlike with a conventional job, there are no guarantees that you will earn an income working as an affiliate marketer as you are an independent contractor.
FINAL THOUGHTS
While they share some similarities, there are some key differences between network marketing and affiliate marketing, with the main one being the pay structure. With network marketing, the main focus is on recruitment. While you can make money by selling products, recruitment is just as crucial. With affiliate marketing, you get paid solely from the successful recommendations you make.
I believe that MLM’s can be a good way to make money online and a few people have proven this to be the case. But the many lawsuits against MLM companies and convictions on pyramid scheme grounds make me shy away from it. I also do not like having to push products to friends and family. I hate the reliance on building a downline. If these things don’t bother you, then MLM is absolutely a good way to make money online.
But if, like me you hate selling stuff to people close to you and building a network of sellers under you, then Affiliate Marketing is the way to go. It is the way I went and I have not looked back. I love what I do. I write about interesting topics and help my audience solve their problems. I don’t sell them anything. I test products and recommend the ones that I believe will help my readers. If they follow my recommendation, I get paid. If they don’t then I don’t get paid. Simple!
While the concept is simple, I don’t want to mislead you! Affiliate marketing takes some specific skills and hard work to be successful. Don’t worry, none of the skills are too technical. In fact they are in the reach of everyone reading this post!
If you are interested in exploring affiliate marketing I would love to help you get started.
CHECK OUT MY TOP RECOMMENDED AFFILIATE MARKETING TRAINING PROGRAM!
I will be waiting on the other side to answer all your questions. It is completely free to start so you have nothing to lose and much to gain!
To your success,
Mike Aha
MORE POSTS YOU MAY LIKE:
How To Start In Affiliate Marketing?
What is Affiliate Marketing and How To Start?
Create and Income With Affiliate Marketing
Do You Need A Website To Do Affiliate Marketing?
Your comparison between affiliate marketing and network marketing is very clear but I would like to add a few more things. Some newer network companies are adopting the affiliate techniques in selling, making people think that it’s an affiliate program when in fact, it still operates very much like a direct selling company because of the recruiting element. I think it’s very misleading and one should study the incentive well before committing to the company’s products/services.
Hi Cathy,
That is an excellent point that I did not include in my post! Thanks for bringing that up.
Mike
Thank you Mike for your highly informative post, your comparison of Affiliate Marketing VS Network Marketing is very appealing. Many network marketing companies turned out to be just pyramid schemes or ponzi schemes, I have no faith of such a form of business.
On the other side of the story, I completely agree with you on Affiliate Marketing, anyone can do it. Once a person finishes the initial steps to build his affiliate marketing business and with a bit of dedication and commitment, money can be made from home for sure.
Thanks for reading my post and commenting Jordan!
Unfortunately, many MLM’s have been sued and found guilty of running pyramid schemes. It’s hard to know which one is legit and which one is not.
Affiliate marketing is an excellent way to make money online! But as you stated, it requires commitment and hard work! If one applies themselves and exercises a bit a patience, the sky is the limit!
Mike
Thank you so much for sharing with us such a beautiful article .I’ve been working in affiliate marketing for a while but before that I worked in network marketing .Although it is quite an experience to say about these two marketplaces but I did not know as well as you describe. That’s why you certainly deserve praise .You can make money from two places, but two places have to work differently .When you illustrate a pyramid about network marketing, I think it will not be a problem for anyone to understand because I do not think it is a good example. In network marketing, the proprietor is at the top of the pyramid, and when the staff is hired to enlarge the marketing space, it goes down from top to bottom like a pyramid and the commission of the proprietor increases. It is but the employment of many .Here you have said one more nice thing: you don’t have to own any product, but only with your ability and hard work you can move forward as I did. And later on Affiliate Marketing says it’s much better than network marketing to me because it can be done at home. This requires a computer or laptop and Internet connection .You can do this by collecting the necessary information and signing up on the YouTube website, which you have described very well through your article. Your article is really cool because I’m really impressed with the way you describe the two marketplaces and I have a lot of help in my work .Hope other friends will benefit a lot and I would like for you some more teaching articles .
Hi Shanta,
Thanks for the lengthy comment. I am glad you found the post useful. Check out this other post I wrote about MLM:
Why Multi Level Marketing Does Not Work
Thanks,
Mike
I like the way you portrayed both business – network marketing and affiliate marketing. I am involved in both markets as I strictly work from the comfort of my house.
Like you pointed out, a lot of cash is needed to succeed in network marketing, with a lot of traveling if you need to scale up the ladder, as you need to organize meetings both online and offline, but this is not the case with affiliate marketing.
Especially if you start with a good platform like you recommended. You can comfortably work from home with low little cash investment but you must be ready to dedicate time to the business model.
Parameter,
You are absolutely correct. There is a stark difference between the 2 business models. I am glad you found the information contained in my post helpful!
Thank you,
Mike
I was a member of several online marketing systems and each time would have a bunch of their products, less money, and fewer friends and I didn’t recruit anyone. I discovered affiliate marketing by accident, three years ago, and have been working on it ever since. I don’t have an upper submission line and I don’t have a lower line that I have to worry about. I no longer burden my family and friends with my work.
Also, I promote the products of a dozen companies I have selected.
Thanks for your comment BlueMoon!
Mike
This article takes me back to the first time I attempted to get into network marketing. If I had information like this available then, I probably would have realized that I was been lured into a pyramid scheme.
This is why I am now a vocal advocate of thorough research on any opportunity online.
Now, I can say with full assurance that affiliate marketing is by far, a better way to earn online. Network marketing requires a lot of efforts to make a decent amount of money. Affiliate marketing does require sustained effort to make it work but it is no news that you can earn way more if you apply the same efforts from a network marketing campaign to an affiliate marketing campaign.
Thanks for sharing.
Well said Lyke! I agree with all your points.
Affiliate marketing is an excellent business model if you are willing to put in work and show some patience.
Thank you,
Mike
Great description of these two marketing systems, Mike.
I tried MLM some years ago, and I was quickly turned off by it. In my opinion, it’s almost as bad as going door to door. Your friends and neighbors quickly tire of your sales pitches, and then try to avoid, or ignore you.
I’m more interested in the affiliate marketing concept, at least here you have more choice as to what products you can sell. It’s always easier to sell something you like, and believe in, than trying to get others into buying other people’s products.
Thanks for clarifying these two systems for me, in great detail.
Paul
Paul,
I am with you on not being a fan of selling stuff to friends and neighbors!!!!
Affiliate marketing was definitely more suitable to my personality and temperament. It helps that Affiliate Marketing works! As long as you are willing to put in the work and have some patience, the opportunities with Affiliate marketing are endless!
Thank You,
Mike
Hi Mike,
Great post on affiliate and network marketing. I think you’ve explained both very well. I have always been familiar with Network Marketing and didn’t really care for it much because of how similar to pyramid schemes. Even though with Network Marketing you sell a product, that isn’t always evident! I think that’s kind of sneaky in a way. I learned about Affiliate Marketing last year and am pretty interested in that. Thanks for the great information about both kinds of marketing!
Hi Anna, Thanks for your comments! I am glad you found the post helpful! Affiliate Marketing is definitely a great business model! I highly recommend it to anyone looking to start their own business online. Unlike Network marketing it does not require recruiting or purchasing inventory!
Thanks,
MIke
Indeed, affiliate marketing and network marketing have a big difference no matter how similar they tend to be. Before I got started online, I usually taught them to be same.
Network marketing supposed to be an interesting model to me, but because of how it’s been manipulated by scammers made it a quick turn off. But with affiliate marketing, I like the fact that I could market any product indirectly to anyone simply by writing what I’m passionate about, no hassle.
Although, anyone can achieve maximum success with either of them, but then, it all depends on one, what one wants. Success with either of them doesn’t come overnight, it comes with hard work especially network marketing as you may tend to recruit a lot of members before you start seeing income.
And again, before we become affiliated to any company to be their marketer, one needs to do a thorough search so we can be confident on the product we’re selling or recommending if not it may cause problems in our businesses going forward.
Hi Kell,
Thanks for reiterating that people can be successful with either model. You also make a point that there are scammers with MLM and that is absolutely true. Unfortunately , there are as many, if not more scammers in affiliate marketing. Look at my reviews on this website and you will see that most of them are negative. It is sad that people prey on the wants and needs of other just to make a few bucks.
Having said that, I am a true believer of Affiliate marketing and of the opportunities it offers. Find good training program and start your online business today!
Mike
Hey, I enjoy while reading your article and learn a lot from it. Now I know the difference between affiliate marketing and network marketing (MLM). Both are the awesome ways to make money. In both we have to put our efforts and earning depends on our efforts. I love affiliate marketing instead of network marketing. I recently started my online business with the help of your number one recommendation. Now we are getting awesome results from our own website. Keep this great work up.
Thanks Deepanshi! Glad you found it helpful.
Mike
Thanks for the comparison! I know that a lot of people, including myself, may put them in the same category. I have been looking into affiliate marketing and would love to learn more! It seems pretty straight forward, but I want to make sure that I understand what is expected of me and what I could do to get started. Thanks for this information!
Hi Jennie,
Glad you liked it and found it helpful. There is definitely a difference between MLM and Affiliate Marketing and it is an important one. Check out my link to Wealthy Affiliate to learn how to successfully become an affiliate marketer. Let me know if you need any help!
Hiya Mike
Thank you for your objective article on Network marketing vs Affiliate marketing. You gave good arguments for both as earning opportunities. I don’t have much experience of either. Which MLM companies would you recommend?
I have never done any marketing before so it was interesting to learn the differences between the two and the similarities also. Thank you for a well researched, informative read that provided me with the means to make an informed choice between the two, krs PurpleLioness
Hi PurpleLioness,
I tried my hand at probably one of the most iconic and I daresay, legitimate MLM company: Amway! I tried my darndest but I was not able to find success. I had limited funds, difficulty getting clients and I just could not make it work. I had a hard time selling things to friends and family (similar products were cheaper on the market).
That said, MLM might work for you. If you have the right skills and temperament.
My temperament and skills were more conducive to Affiliate Marketing. I was drawn in. After several stops and starts, I finally found my footing. I have been doing it ever since.
I hope you found this circular response helpful- at least a bit 🙂
Mike