Are you wondering what’s the difference between affiliate marketing and network marketing (aka multi-level marketing)? Well, they are easy to get confused because both are forms of marketing where income can be generated by recommended products or services. However, there are fundamental differences that should be exposed to prevent any further confusion.
I have been involved in both affiliate and network networking for the past 10 years and feel I have a pretty good understanding of the differences and similarities between the two. I hope to share this insight with you, so you can make an educated decision on which you decide to pursue.
First, let’s delve into what both affiliate marketing and network marketing actually are… since they are totally different.
Affiliate marketing is the process of earning a commission, either one-time or recurring, by promoting a company’s or persons services or products.
Network marketing is a business model that depends on person-to-person sales by independent representatives, based on recruitment.
Cost To Join
Affiliate Marketing – There is generally no cost to become an affiliate with a company. There should be no cost to sign up OR earn commissions as an affiliate.
Network Marketing – In most companies, you have to pay a sign-up fee or purchase a kit to be part of the company.
Affiliate Marketing – No purchases are required by affiliate to earn commissions. There are NO kits to purchase.
Network Marketing – Product purchases are usually necessary on a montly or regular basis to maintain good standing with the company and qualify for commissions.
Earning Potential / Commissions Structure
Affiliate Marketing – There are generally no caps to the income affiliate marketers can earn. The commission structure is set up very straight-forward; for example, 20% of the sale. Generally only pay on 1 level (direct sales), sometimes 2 levels (sub-affiliates).
Network Marketing – Oftentimes complicated compensation plans that pay on many levels. There are many different types of MLM compensation plans such as binaries, unilevels, matrixes, hybrids of these, etc. They are designed to earn money for the corporation, NOT the members, usually with a lot of fine print and stipulations.
Affiliate Marketing – Products or services are not marked up to pay affiliates, rather affiliates are paid commissions as a “thank you” for bringing more customers to the company.
Network Marketing – Products are generally marked up extremely high to pay all the members in the MLM. If you research the products in MLMs, you’ll see how grossly over-priced they are. Sometimes they are 3 to 4 times higher than products in stores. And no, the products are NOT usually that special to account for the jacked-up prices.
Affiliate Marketing – Has NOTHING to do with recruiting new members! There are no “downlines” or “teams” to be built in affiliate marketing. Affiliates do not recruit!
Network Marketing – Are ALL about recruiting new members to help you build your “team”, which is designed to help you earn money. They use all sorts of slimy recruiting techniques, which usually involve pretending to be interested in total strangers’ lives on social media or even in person, asking personal questions to build rapport with them with the intent of recruitment. MLMs know all the tricks in the book and they are masters at manipulation.
Affiliate Marketing – Affiliate programs usually do NOT (or should not) advertise themselves as “business opportunities”. They are not business opportunities at all. They are a way for anyone to sign up as an affiliate, get a referral link, and share the link on their blog or social media. When someone click on that referral link and purchases the product or service, the affiliate earns a commission (or recurring commissions).
Network Marketing – Typically promote themselves as business opportunities and all the hype that comes with becoming financialy free (through the MLM, of course)! Well, you are not the owner of the MLM when you sign up, you are just an independent contractor and responsible for your own taxes, just like with affiliate marketing. You are issued a 1099 form and left to navigate your tax situation with usually no guidance from the company. The same is true with affiliate marketing.
The Bottom Line
Affiliate programs are NOT the same as network marketing opportunities. While not all affiliate programs are legit (you should always do your research and partner with a reputable company), they are generally risk-free and cost nothing to join and earn money with. You are simply recommending products using an affiliate link provided to you. Some affiliate programs pay upfront commissions, some pay recurring income. There are many different types of affiliate programs.
Network marketing, on the other hand, is a scheme to get members to sign up under the impression they will earn tons of residual income and become financially free. Product purchases are usually required, and most people LOSE more money than they earn because they are required to maintain a minimum order requirement on a monthly basis to qualify for commissions (total BS). Their products are grossly over-priced and over-hyped. The compensation plans are designed to earn the company the most money. In essence, they are designed for members to FAIL, but still keep purchasing the products to keep the company earning money.
If you want to earn passive income online, there are other options aside from joining a moronic MLM. Don’t waste your money on kits, over-priced products, monthly fees, hype, lies, and all the cult-like mental programming that comes with network marketing.
On the other hand, affiliate marketing is how many of the most successful online entrepreneurs earn money with virtually ZERO upfront cost or risk (aside from starting a blog). Affiliate marketing is scalable and there are tons of options (thousands of affiliate programs in every niche imaginable). While you won’t earn on 20 levels, you will be able to understand the straight-forward commission structure and learn how to build a profitable online business with very minimal investment. No recruiting, parties, or any of that nonsense.