Affiliate marketing and MLM (Multi-Level Marketing) are two popular business models in digital marketing.
While they both involve promoting products or services and earning commissions…
There are some subtle and obvious differences between the two.
You should know this before starting affiliate marketing.
Let’s unpack them in this affiliate marketing vs MLM article.
What Is the Difference Between Affiliate Marketing vs MLM?
These two terms may seem synonymous because of the promise of passive income…
But that’s not entirely true.
I’ll go over the differences in this section.
It’s also worth noting that people mistake affiliate marketing for:
- Network marketing
- Pyramid schemes
- Ponzi schemes
They’re not the same.
MLM (Multi-Level Marketing)
MLM (multi-level marketing) is like a game of “tag” in the business world.
People sell products or services and recruit others to do the same.
As their “team” grows, they earn commissions from their own sales and their recruits’ sales.
It’s a way for companies to grow their sales force quickly, but it can sometimes be controversial due to its pyramid-like structure.
Why?
Because just like pyramid schemes…
The ones at the top benefit the most.
MLMs are legal but pyramid schemes aren’t.
MLMs make money by selling actual products via a tiered network system.
Pyramid and Ponzi schemes rely solely on recruitment to keep the scam going.
Affiliate Marketing
Conversely, affiliate marketing is 100% legit, but it does share similarities with MLMs.
It’s a direct and performance-oriented marketing strategy for affiliates to earn commissions for the products and services they promote.
Affiliates join programs that provide them with unique links to share across various platforms like:
- Websites
- Blogs
- Social media
When someone clicks on the link and makes a purchase…
The affiliate receives a commission.
This approach benefits both the business and content creators like you.
Advantages of Affiliate Marketing vs MLM
I’ve gone over the difference, but now let’s look at the advantages of choosing affiliate marketing over MLM as a creator.
1. Full Control Over the Products You Promote
You can’t choose the products to promote in MLMs.
Here’s the process:
- Join an MLM program
- Sell its products and services
- Recruit more members
- Get them to promote
It may have nothing to do with your interest, expertise, and target audience.
Your success depends on your ability to recruit others into the program and build a network of distributors.
Affiliate marketing on the other hand…
You can join as many affiliate programs or networks as you like.
Promote any product on any platform.
And if you don’t believe in the product anymore?
Just stop promoting it.
2. No Closing is Required
In MLM, you not only have to promote the products or services…
But also be actively involved in the sales process.
This means you need to:
- Personally interact with potential customers
- Explain the product features and benefits
- Attempt to close the sale
That’s too much work for my liking.
In affiliate marketing, the sales pipeline is already done.
Your only mission is to drive traffic and generate leads.
This is done through product reviews, product comparisons or roundups in your affiliate marketing niche.
When someone clicks on your affiliate link and purchases, the merchant takes care of the sales process.
This includes:
- Order fulfillment
- Customer support
- Product delivery
You don’t have to deal with any logistics associated with the product.
That’s the dream.
3. Choose How To Promote Your Product
Promotion guidelines are often standardized and provided by the MLM business.
You’re pretty much an employee following specific protocols.
They may provide you with scripts, training materials, and marketing tools to help you promote the products or services.
While this can be beneficial for beginners…
You won’t be able to set up custom promotional campaigns if it doesn’t align with their goals.
But with affiliate marketing…
The sky is the limit.
Promote whatever, however, and whenever you want.
You have the freedom to experiment with different marketing techniques and optimize your efforts based on the results you achieve.
Nobody will say a thing.
4. Free to Join
MLM programs often require new members to pay upfront fees or purchase a starter kit.
It’s like a glorified goody bag. Only you don’t feel like it’s a gift.
These costs can vary depending on the MLM company and the specific program.
That’s not all…
You may also need to:
- Purchase inventory
- Attend seminars or conferences
- Maintain a monthly sales quota
- Renew your membership
These costs can add up, especially for individuals who are just starting and may not have a stable income.
Joining an affiliate marketing program is generally free of charge.
You sign up, receive your unique affiliate links, and start promoting products immediately.
There are ZERO startup costs or upfront fees.
What’s the worst that can happen?
You don’t make commissions, but your bank account stays the same.
5. Start Earning Immediately
Earning money with MLMs will take a LONG time as you need to:
- Build a network
- Recruit members
- Cover recurring costs
They also have complex compensation plans that are tough to understand.
Realistically, most are lucky to break even.
Affiliate marketing on the other hand…
You can start promoting and earning commissions the moment you get your link.
Granted, you don’t get to cash out immediately as there is usually a minimum threshold or waiting period to account for any customer refunds.
But the amount will at most be between $50 to $100.
Most will allow you to choose the threshold.
Affiliate Marketing vs MLM (FAQs)
What Is the Difference Between Affiliate Marketing and Network Marketing?
The main difference between affiliate marketing and network marketing is their focus and compensation structure.
Affiliate marketing focuses on selling products or services and earning a commission for each sale or lead generated through online platforms.
Network marketing relies on person-to-person sales by a network of distributors and involves earning commissions on product sales as well as on the sales made by the people recruited into the business.
Is MLM Better Than Affiliate Marketing?
No, MLM is not better than affiliate marketing.
While they both involve promoting products or services and earning commissions…
You’ll rarely make any money with MLM because of the crazy startup and recurring costs.
However, every stakeholder benefits from affiliate marketing without any costs.
Merchants get more revenue and exposure without investing in additional distribution channels.
Affiliates get more commissions without worrying about logistics.
Is Affiliate Marketing a Pyramid Scheme?
No, affiliate marketing is not a pyramid scheme.
Affiliate marketing allows you to earn commissions by promoting legitimate products or services.
Pyramid schemes rely on endless recruitment with no focus on actual product sales.
It’s a cash grab if you ask me.
Affiliate Marketing vs MLM: Which is Best?
I think my stance is pretty clear.
Don’t even think about MLMs as a monetization source.
Even the cons of affiliate marketing outweigh the benefits of MLMs.
That’s how meaningless it is for you as a creator.
With affiliate marketing, you can:
- Join programs for free
- Ignore sales and logistics
- Earn immediately (but withdraw later)
- Choose what, when, how, who to promote
It’s a no-brainer.
I hope that clears things up.
