Affiliate Marketing vs MLM: What is the Difference?

Unless you have not been anywhere near the internet for the past decade you will have encountered the words ‘Affiliate Marketing’ from time to time. This ever-growing and popular method of income generation have gained much popularity in the past several years.

Affiliate Marketing has reported over 9% growth year over year. It has somewhat replaced the concept of the once-popular Multi-level Marketing or MLM as it was commonly known.

What are the main differences between Multi-level Marketing and Affiliate Marketing? Here we will take a look at each and discover some of the differences between the two selling methods.

difference between affiliate marketing and mlm

What is Affiliate Marketing?

Affiliate Marketing is the sale of items provided by retailers or retailer networks known as Affiliate Marketing Networks. The items for sale are included on the publisher’s website by way of clickable links or images that take the user to a sales portal.

Once the sale is completed the transaction is recorded by way of a tracking cookie which identifies where the customer came from. A commission is then paid to the website owner that the customer used to find their way to the end product.

What is Multi-Level Marketing?

This is also known as Network Marketing as it depends on building a team of people to sell the products offered. Less reputable Multi-level marketing programs were known as Pyramid Schemes as the rewards and benefits were often heavily weighted to the people at the top of the pyramid.

As the profits roll down through the levels or downlines the rewards become less and less. Meaning the people on the lower levels have to work much harder to realize results. 

Pros and Cons of Affiliate Marketing and MLM

#1 Product Choices

MLM – typically offers a product or a range of products that are predetermined by the company or owner of the scheme. This can be a bit restrictive as there is no real option to expand or add further items to your product line.

In addition, unless you happen to be selling a popular product, there is always the risk of being stuck with poor quality items or a product that nobody wants. 

Affiliate Marketing – you will enjoy much more freedom of choice when it comes to the products you choose to sell. Affiliate Networks such as Share a Sale partner with a huge amount of retailers and offer literally thousands of different products.

There are also stand-alone items that you can sell on your website from retailers and companies. As it is your site you get to decide exactly what you want to sell and who you want to partner with giving you a lot of choice and flexibility.

#2 Entry and Start-Up Costs

MLM – entry and start-up costs can be quite high depending on your level and the product that you will be promoting. Several Multi-level Marketing schemes require you to buy a specified amount of product just to get started.

There can also be monthly or annual fees and registration costs to consider. There are usually decent bonuses to be had, but they require buying the product at healthy levels to achieve them. The initial investment to start an MLM program can be off-putting for some.

Affiliate Marketing – low to no start-up cost is part of the overall appeal of Affiliate Marketing. The main requirement is to set up a website to promote your products, if you are relatively techy you can do this for not much money at all.

Even then it may not be necessary, some people operate successful affiliate marketing operations using social media alone. Add to this that there is no need to maintain an inventory or stock levels then it can be a very appealing prospect indeed. 

#3 Commission Structure

MLM – one of the biggest frustrations with MLM is that it can have a complicated and convoluted commission structure. This can be based on sales percentage, registrations, new member sign up and various other elements that go into creating the overall packages.

Add to that the fact that the commissions can vary wildly depending on your level within the organization and how many of your own team members you have. The compensation structure of most MLM organizations is not easy to follow. 

Affiliate Marketing – offers a simple and easy to understand commission pay structure. Depending on how you decide to market your products, either individually or via an Affiliate Marketing Network, the commission fees and bonuses are typically laid out upfront with no nasty or hidden surprises.

There are often special deals and member pricing to take advantage of so the savvy marketer can keep an eye out for these promotions and use them to boost profits. 

#4 Ease of Operation

MLM – by its nature Multi-level Marketing requires that you enlist or recruit more team members to really achieve any profits. Add to the fact that you have to sell and market your products this adds another layer of effort.

You will have to convince people that your product is viable enough for them to sell and make a profit then get them to sign up as a member of your team. Not an easy task and it can be frustrating and time-consuming, especially if you are just starting out yourself. 

Affiliate Marketing – sit back, relax, and watch the sales roll in. Ok well its not QUITE that easy. It will take some effort to get your website up and running and start generating sales. You may need to invest some money in advertising or spend some time promoting your products via social media to drive traffic to your website. 

You will also want to make sure your SEO (search engine optimization) is on point so that potential customers can find your website. None of this is easy, but some would argue that it’s quite a lot easier than selling stocks of product that you have already paid for and recruiting other sellers. 

#5 Marketing Support

MLM – while there can be some drawbacks to Multi-level Marketing most companies do a relatively good job when it comes to providing training and support. They want you to be successful so typically will do all they can to educate you in learning about their products, making sales, and recruiting additional staff.

This is partly what your yearly registration fees pay for. Resources are usually abundant and readily available and you will most like be able to connect directly with another marketer for help and information.

Affiliate Marketing – there is a massive amount of information about affiliate marketing to help you achieve success. If you have partnered with an Affiliate Marketing Network that provides your products they will no doubt have resources and online guides for you to read and download.

If you require additional training there are many courses online – the drawback is that you will need to pay for the good ones. You may also find the human connection a bit remote with MLM, while there is help available you will most likely not have a mentor to reach out to for advice. 

#6 Monthly Targets

MLM – to keep producing an income and making your investment worthwhile you will need to keep driving sales. Failure to do so can mean that your membership is withdrawn and you are left with a garage full of paid-for product to sell.

It can add some pressure to new Multi-level Marketers but it is common practice for companies to require a minimum sales number or target from its members. 

Affiliate Marketing – you will have the luxury of not having to meet any sales requirements or limits. Of course, the downside to this is that if your sales drop then so does your commission so it benefits you to keep selling and earning.

That said, if you do happen to have a bad month there is no risk of the plug being pulled. Your profits will simply dip and hopefully, you can take some steps to get back on track. But there are no minimum expectations or sales requirements for Affiliate Marketers

#7 Additional Monetization

MLM – once you have a hot sales prospect for the product you are selling you can always boost your income by upselling or offering additional add ons that your brand or company provides. It is all in the same vein as the product you are selling and in Multi-level Marketing, there are not many options to increase your income in other ways.

As you are promoting products on behalf of a company you will be limited to the product offerings they provide.

Affiliate Marketing – after you have your website up and running there are some additional monetization options you can take. It is your website so it is entirely up to you what you sell or promote on there. Some popular money-making avenues are providing extra services, offering training courses or generating ad income.

Google Adwords is a popular method to gain a few dollars extra income from people visiting your site. It doesn’t cost your visitors anything and requires minimal effort on your part. Win-win!

Summary

Based on the information we have it seems that in the current market Affiliate Marketing is the clear winner if you are looking to generate and income for yourself. You can benefit from 

  • Low Start Up Costs
  • Maximum Flexibility
  • Wide Product Choice
  • Monetization Options

If you are searching for some Affiliate Marketing training programs that offer good advice and steps to success then check out our list of reputable resources.

These training programs will guide you through the steps and offer valuable insights to get you up and running quickly and help you turn profits faster. 

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