Is affiliate marketing a pyramid scheme? What’s the difference between affiliate marketing and network marketing or multilevel marketing (MLM)?
If you’ve been looking to get started in online business, it’s very important to know the difference between the two, how each works, and which one is BY FAR the more sustainable option for growth.
Is Affiliate Marketing a Pyramid Scheme?
No, affiliate marketing is not a pyramid scheme. Affiliate marketing involves no recruiting, has no downlines, and is based on commissions earned by connecting people with products and services they’re looking for online.
According to Quora.com,
Affiliate Marketing is a process of selling or endorsing a product in exchange for a portion of any sales that you generate. A company will typically give you a referral link, or some sort of unique identifier, to keep track of how many sales you have generated by referring a product to the customer. A pyramid scheme begins with a single business transaction between two people. An offer is then made that person 2 can make money selling this product as well.“Is Affiliate Marketing a Pyramid Scheme?” – Quora.com
In this article we’ll take a look at how affiliate marketing works, what makes pyramid schemes illegal, the core differences between affiliate marketing and network marketing and MLM, why affiliate marketing is more sustainable, and how you can get started affiliate marketing today.
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What is Affiliate Marketing and How Does It Work?
Have you ever bought something online? If you reside on planet earth, I can almost guarantee your answer’s a yes. In fact, you’ve probably taken part in the affiliate marketing process without even knowing it.
So how does affiliate marketing work? Affiliate marketing is all about connecting people with the products and services they’re already searching for online.
A customer does an online search, the search takes the customer to a website where they find more info on the product or service they’re looking for, then an all-important link (called an affiliate link) takes the customer to the merchant’s website where they can make their purchase.
Just like that, each and every time this process happens and a purchase is made, the affiliate marketer earns a commission.
Commissions are usually a percentage of the total purchase price. There is no limit to how many times you can earn a commission, and commissions can also be recurring when dealing with subscription based purchases.
So every time you see a blogger writing a product review, or you watch a YouTuber doing a video review, or you see your favorite instagrammer promoting a product in their posts and stories, that’s affiliate marketing at work.
So how does affiliate marketing compare to pyramid schemes?
What Is a True Pyramid Scheme?
First of all, true pyramid schemes are exactly that: schemes. And they are 100% illegal. The reason I say “true” pyramid schemes is because network marketing and multilevel marketing businesses tend to be called “pyramids” because of their structure.
The fact is that the vast majority of network marketing and MLM businesses are not true pyramid schemes. With true, illegal pyramid schemes, money is exchanged but no actual product or service is sold.
True pyramid schemes tend to be schemes like cash gifting where people are duped into giving away their hard earned money into a “get rich quick” type system. In return, they are promised that they will soon be on the other end of this system, receiving even more money from other strangers duped into the same scheme.
Pyramid schemes are filled with unrealistic promises of revenue and “getting something for nothing”.
DO NOT FALL FOR PYRAMID SCHEMES!
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Network Marketing and MLM
While network marketing and multilevel marketing may have a “pyramid” structure to them, they are not true pyramid schemes. In other words, your friends and family who are trying to recruit you into their latest, greatest home business aren’t con artists.
Are these MLM type business a good investment for sustainable success? In my opinion, no. I’ll explain why.
What makes network marketing and multilevel marketing legal is that there is a singular product or service that customers are getting for their money. Network marketers will buy that product or service themselves, and then recruit people to their team to do the same thing.
These team members will also buy the product or service and recruit more people to the team as well.
In network marketing, the model of “gather a few customers and teach others to do the same” begins to sound very appealing because of the fact that you not only get paid on your efforts, but on the efforts of your team as well.
However, because of this model, the business can only have limited success. Members who jump in during the early stages have a much better chance of growth and find less saturation, while members who come in later have less and less chance of finding other people to recruit.
Further, network marketing compensation plans tend to be very convoluted and confusing. They are filled with bonuses and incentives that draw people into the team promising a quick return of investment, but the vast majority of representatives that join never qualify to earn these commissions.
In fact, annual income disclosures from even the most popular MLM business show a shockingly high percentage of MLM representatives fail to earn a single dollar.
Lastly, the structure of the model itself can limit you. In many “binary” model plans, for example, the network marketer is recruiting into two legs, left and right, but will only get commissions based on the leg with the LEAST GROWTH.
Why Affiliate Marketing is a More Sustainable Option
First and foremost, affiliate marketing is a much more straightforward business model than network marketing and MLM. There is no recruiting aspect, no downlines, no confusing compensation plans, and no limits put on your business because of any “binary” or “matrix” model structures.
With affiliate marketing you also have complete freedom to build your business in any niche of your choosing. You’re not limited to simply selling and reselling a singular product. In fact, most affiliate marketers build multiple websites spread across several different niches.
There are no diminishing returns due to saturation. Now more than ever people are doing the majority of their shopping online.
You also don’t need products or services of your own to be successful. You’re simply the middle man connecting your global audience with the merchants they’ve bought from countless times, 24 hours a day, 7 days a week.
The biggest tool to any affiliate marketer is a dependable keyword research tool that gathers data from all the search engines allowing you to know the exact word for word searches your target audience is making.
And when you know exactly what your customers are searching for you have the ability to create content that is the ANSWER to those searches resulting in massive, FREE traffic.
Finally, the internet is NEVER closed, meaning there are no limits in terms of scalability or sustainability.
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How Can I Get Started Affiliate Marketing?
Where you get your training matters.
I’ve done countless reviews of so many affiliate marketing training platforms that make unrealistic promises and lean heavily on the “guru” based approach where you buy very high ticket training modules in hopes of piggybacking on their success.
Don’t ignore obvious red flags and end up spending thousands on training. If you put yourself in such a deep hole to start with, how will you ever be profitable?
You’re smarter than that.
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Affiliate marketing is a much more sustainable option than network marketing and MLM. Instead of endless recruiting and convoluted compensation plans, affiliate marketing connects people with the products and services they’re already searching for online.
Any questions? Have you had any experiences in MLM and network marketing? What questions do you have about getting started with affiliate marketing?
Leave any questions or comments you have in the comments section below. I always respond and I look very forward to connecting with you!
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