Affiliate Marketing vs MLM – What’s The Difference?

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Affiliate Marketing vs MLM – have you been wondering, if they are the same?

This post will be not only about affiliate MLM software but also about everything around the affiliate MLM software business. If you’re trying to earn some extra money, affiliate marketing is an efficient way to do that. However, many people mistake affiliate marketing for multi-level marketing (MLM). This misunderstanding prevents some from starting on what would otherwise be a fun and lucrative side company.

Unlike MLM companies, affiliate marketing services are free to join and don’t ask you to employ someone else on a “network” basis. Knowing the discrepancies between affiliate marketing and MLM will help you see how the former will potentially result in a decent income.

This article will clarify how the two methods work, explaining the main differences between them, and then we will discuss some of the benefits of affiliate marketing. So, let’s get started.

What’s Multi-Level Marketing?

With multi-level marketing, you are joining a team to support a product or service. Everyone on the MLM network is trying to promote precisely the same product or service. In most cases, you will be hired by someone who is already part of the network. A typical MLM network would look a bit like this: 

Affiliate Marketing vs MLM - What's The Difference?

If this looks similar to a pyramid scheme, that’s because multi-level marketing is about as close to a pyramid scheme as it can be while keeping things legal. 

As long as a legitimate product or service is marketed by the network, it is a legal pyramid. So, most MLM businesses find a product or service to promote and then set up a network to promote it. What makes a pyramid scheme illegal is that no product or service is provided – you will only pay to be part of the network while adding people to the network to receive commissions.

From my observation, 99% of all MLM systems out there are illegal borderlines. If you advertise a product or service on the network, you can hardly make any money at all. It’s because you’re right at the bottom of the pyramid. The real money comes from hiring people to sell a good or service to you. 

The more people you hire and the more people you recruit (that was a mouthful, I know), the higher commissions you would receive on ALL sales.

So essentially, since you’re starting at the bottom of the pyramid, you’re basically sharing most of your commissions with the higher ones in the pyramid. Until you employ many other people, you will never be able to earn a full-time living.

Affiliate Marketing vs. MLM: understand the difference

Multi-level marketing is also referred to as network marketing or pyramid sales. Since the earnings are commission-based and originate from sales to end-users – MLM often gets mistaken for affiliate marketing.

Indeed, there are some significant similarities between the two. 

While the purpose of MLM is to make the person at the top – rich, affiliate marketing sales and commissions are independent of other members on the “network.” 

So, affiliate marketing is a lot different. 

With this approach, participants will select which goods they endorse and will receive a commission for any sale they produce. The retailer or corporation shall pay this money to the affiliate for driving, selling, or referral. There is no network recruitment involved.

Read our related post: where to find affiliates?

There are also no start-up fees for entering the affiliate marketing network. As long as you have a method to promote products, you can start doing this free of charge. Many people find this approach very profitable, and the partnership is mutually beneficial to both the organization and the individual affiliates.

3 Benefits for Affiliate Marketing vs. MLM Systems

Affiliate Marketing vs MLM - What's The Difference?

Let’s hope you’ve got an understanding of the fundamental discrepancies between these two methods. Now, let’s look at the three benefits of affiliate marketing vs. MLM systems.

1. You can pick goods to sell based on your interests

One of the advantages of affiliate marketing is the level of power that you have. First of all, you can choose which brands you want to partner with and which goods or services you want to endorse.

This ensures that you can concentrate on things that you are interested in and passionate about. When you select products that you know about and already use, you will help customers make better buying decisions.

With MLMs, you are limited to pushing unique items that your parent company has selected. You may not be interested in these products, and it may be difficult to try to sell something you don’t believe in.

2. No joining fee and every sale earns you money

MLMs typically have subscription fees and other start-up costs. Most of the participants have to invest in a package containing the items they are expected to market. Although sponsors also earn discounts on these items, the amount typically only covers the expense of being part of the network.

Marketers often have to gain certain points in several MLMs before they see any real money. Much of the money you will earn, if any, comes from recruiting other people.

3. You have full control over how to advertise affiliate goods

Affiliate marketing networks control purchases of their affiliates through the use of special tracking links. Brands will see how consumers arrived at their sites and offer credit to the promoter who was driving the traffic.

There is, therefore, a wide variety of approaches that you can use for affiliate marketing promo. You can post your link anywhere, as long as you’re not spamming other people with comments or emails. Some of the most common are websites or blogs, product reviews, social media, and videos.

Affiliate marketing can be executed exclusively online, and you can sell it to total strangers. While many MLM participants can make sales in this way, most of their revenue comes from direct communications.

MLM is committed to hiring other participants. A lot more personal interaction is required to create a network. This can also include tactics that others consider to be irritating.

With affiliate marketing, you often only talk to people who are likely to be interested in your products. For example, through an affiliate website, you can tailor your content to reach people who are looking for products in your niche.

Why MLM isn’t a viable business model

First of all, realize that owners of MLM networks are typically quite successful marketers themselves, but a significant number of them are still very dishonest. 

Affiliate Marketing vs MLM - What's The Difference?

They’re going to tell you everything you want to hear in order to get you to join. They already know what the problems are and will answer them in a way that will help to guarantee them another sales rep (what you are to them). Also, remember that these advertisers have a way of influencing others to employ more people. Rest assured, you will be told more than once to go out and hire your closest friends and family members for them to expand their network.

So let me tell you, first of all, that multi-level marketing is not fast nor simple. 

If you don’t have many friends who are essentially willing to work to make you money, it will take you a long time to hire enough people to get you high enough on the pyramid-ladder to get some decent commissions. 

It can be a full-time job just to hire someone to join the network, let alone market the product or service you’re supposed to sell and get commissions on. And what do you think the people you’re hiring are going to do? Selling the goods to earn someone higher in the pyramid commission or wasting their time seeking to hire others.

Even if you manage to get high on the pyramid, you’re not running your own business. It’s up to you to sell those below you on the pyramid. You don’t gain if they don’t sell. Plus, you can’t even pick which goods or services to endorse. You are at the mercy of the MLM corporation to determine that. In other words, you’re nothing more than an employee, and you can be dropped at any moment.

There may be some of you out there who insist that you can make money with MLM. I agree you could. But suppose you want a more secure and legitimate long term company (one that you actually manage) that takes the same amount of time to be profitable. 

In that case, affiliate marketing is a far superior choice.

But how do the operators of the MLM networks make millions (and they do make millions)? 

In a few different ways. 

First of all, for many of these networks, if you actually sell the goods or services that you are meant to sell, they get most of the fee. Another way for these businesses to make a lot of money is by offering extra “marketing plans” to help you make more sales. You’re going to get exclusive access to a marketing scheme, or you’re going to get improved goods to sell or get discounted newspaper advertisements or anything else that’s going to get you in. If your marketing package doesn’t drive sales, they’ll keep trying to sell you up until you actually leave.

You may also want to read:

Conclusion

Affiliate marketing and MLM services are often mistaken for one another. However, unlike affiliate marketing, it’s extremely difficult to make a profit while being a part of the MLM.

As we covered in this article, there are three benefits to affiliate marketing vs. MLM programs: You can select the goods you sell based on your interests. There is no cost to join, and you’re going to make money on every sale, independently of anyone else. You have full control of how you market your services or products, and you have full control over the business you’ve built around affiliate marketing.

Frequently Asked Questions About MLM

MLM affiliate software – what is it?

MLM affiliate software stands for: multi level marketing affiliate software, and is designed to provide affiliates and networks with a multi tier options for running their business. This is a legal and totally legit way to encourage multi level affiliates to function as a whole, supporting the business. You can find a free or paid mlm affiliate software anywhere on the web.

Affiliate marketing vs Network marketing

Affiliate marketing is an umbrella term for all kind of affiliate marketing methods, while network marketing refers to the earnings structure where commissions are tiered.

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Elizabeth Sramek
Elizabeth is a Senior Content Manager at Scaleo. Currently enjoying the life in Prague and sharing professional affiliate marketing tips. She's been in the online marketing business since 2006 and gladly shares all her insights and ideas on this blog.
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