Brand Marketing
8 min read

Affiliate Marketing vs. MLM: What's the Real Difference?

Discover the distinct differences between affiliate marketing and MLM in this comprehensive guide. Learn the unique aspects of each business model.
Image of author Nick Cotter

By Nick Cotter
Updated Jan 10, 2024

Affiliate Marketing vs. MLM: What's the Real Difference?
The content featured on this page includes products from our partners, who may provide compensation to us. This partnership can affect the selection and placement of products we discuss. Nonetheless, our assessments remain unbiased and are solely based on our independent judgments.
Table of contents
Wait a minute...
Don’t you want to find creators from your online store?

Upfluence integrates easily with:
  • Amazon
  • Shopify
  • WooCommerce
  • Magento
  • BigComerce
Get Started
Sponsor

Are you tired of trying to navigate the complex world of marketing on your own? Are you unsure of which approach will be most effective for generating income and achieving your business or personal goals? If so, you're not alone. Many people struggle to choose between affiliate marketing and network marketing (MLM), two popular and seemingly similar approaches to marketing.

In this article, we will uncover the key differences between these two models and help you decide which one may be the best fit for your unique needs. Whether you're a seasoned entrepreneur or just starting out, this information can be invaluable in helping you choose the right path for your success. Keep reading to learn more.

SPONSOR
HOLD UP...

De'Longhi & Mercedes Benz use Kademi's PRM software.

Want to know why?

Email us.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Overview of Network Marketing Partners.

What is network marketing?

Network marketing, also known as multi-level marketing, is a business model in which a company sells its products directly to consumers, often through a network of independent distributors. These distributors are typically compensated not only for the sales they make, but also for the sales made by other people they recruit to join the network. Network marketing is a way for companies to reach a wider market by selling their products directly to consumers, and it is often used as a way for people to earn income by selling products and recruiting others to do the same.

What are the benefits of network marketing?

There are several potential benefits to network marketing, including:

  • It can be a way for people to earn income by selling products and recruiting others to do the same.
  • It can be a way for companies to reach a wider market by selling their products directly to consumers.
  • It can be a way for people to start their own business without having to invest a lot of money upfront.
  • It can be a way for people to work flexible hours and be their own boss.
  • It can provide opportunities for personal development and growth.

What are the pitfalls of network marketing?

Network marketing, also known as multi-level marketing (MLM), can be a legitimate way to earn income, but it also has its drawbacks. Some common pitfalls of network marketing include:

  • It can be difficult to make a profit, as the majority of income often comes from recruiting others into the network rather than selling products.
  • It can be challenging to find customers outside of the network, making it difficult to sell products to people who are not already involved in the business.
  • Many network marketing companies have been accused of being pyramid schemes, where the focus is on recruiting new members rather than selling products.
  • The products offered by network marketing companies are often overpriced, making it difficult to compete with similar products sold by traditional retailers.
  • The income potential in network marketing is often exaggerated, and many people end up losing money instead of making a profit.

Overall, it's important to do thorough research and carefully evaluate the potential risks and rewards of any network marketing opportunity before getting involved.

5 examples of network marketing companies.

Here are five examples of network marketing companies:

  • Amway
  • Avon
  • Mary Kay
  • Herbalife
  • Tupperware

These companies use the network marketing, or multi-level marketing (MLM), business model to sell their products or services. In this model, distributors earn a commission on their sales and have the opportunity to recruit and build their own teams of distributors. This creates a network of salespeople who work together to sell the company's products, allowing the company to reach a wider market and providing distributors with the potential to earn additional income.

What is a pyramid scheme?

A pyramid scheme is a type of investment scam in which people are recruited to become members of the scheme, with the promise of making money through the recruitment of new members, rather than through the sale of a genuine product or service. The scheme relies on the constant recruitment of new members in order to generate profits, and as a result, the vast majority of people who participate in the scheme end up losing money.

Is network marketing (multi-level marketing) considered a pyramid scheme?

Yes, multi-level marketing (MLM) can be considered a type of pyramid scheme. In a pyramid scheme, individuals attempt to make money by recruiting new members into the scheme, rather than selling a genuine product or service. This can be compared to MLM, in which individuals earn money by recruiting others into the company, rather than selling a product or service.

Is affiliate marketing a pyramid scheme?

No, affiliate marketing is not a pyramid scheme. In affiliate marketing, individuals promote products or services on behalf of a company, and earn a commission for each sale or referral that they make. This is different from a pyramid scheme, in which individuals make money primarily through recruiting others into the scheme, rather than through the sale of a product or service. In affiliate marketing, the focus is on selling a product or service, rather than on recruiting new members.

What are the Key Differences Between a Multi-Level Marketing and Affiliate Marketing?

The key differences between multi-level marketing (MLM) and affiliate marketing are the way in which the sales are made and the potential income opportunities for the salesperson.

In MLM, sales are made through a network of distributors who earn a commission on their own sales as well as on the sales of the other distributors they recruit to join their team. This creates a pyramid-like structure, with the salesperson at the top of the pyramid earning a commission on the sales of the distributors beneath them.

In affiliate marketing, sales are made by individuals who are not necessarily part of a formal sales team or network. These individuals, called affiliates, earn a commission on sales they generate through their own marketing efforts, such as through a blog or social media account. Unlike in MLM, there is no pyramid structure in affiliate marketing, and affiliates do not earn a commission on the sales of other affiliates.

Overall, the main difference between MLM and affiliate marketing is the structure of the sales team and the potential income opportunities for the salesperson. In MLM, there is a hierarchical structure and the potential to earn a commission on the sales of other distributors, while in affiliate marketing there is no such structure and affiliates only earn a commission on their own sales.

Which is better affiliate marketing or network marketing?

It is difficult to say which is better, affiliate marketing or network marketing, as both can be effective ways to earn income and both have their own unique advantages and disadvantages.

One advantage of affiliate marketing is that it is generally less expensive to get started than network marketing, as there is usually no requirement to purchase a starter kit or inventory of products. Affiliates also have the flexibility to promote the products or services of their choice, allowing them to focus on a niche that interests them and potentially earn a higher commission on sales.

However, network marketing can offer some advantages over affiliate marketing, such as the potential to earn a commission on the sales of other distributors in the network. This can provide a residual income stream and the potential to earn more through the sales of others. Network marketing also often includes training and support from the company, which can be beneficial for those who are new to sales or marketing.

Ultimately, the choice between affiliate marketing and network marketing will depend on an individual's goals, experience, and personal preferences. It may be worth considering both options and weighing the pros and cons before making a decision.

Wrapping it all up.

In conclusion, both affiliate marketing and network marketing can be effective ways to earn income. While affiliate marketing offers the flexibility to promote a wide range of products and the potential to earn a higher commission on sales, network marketing can provide the potential for residual income and the support of a sales team. Ultimately, the choice between affiliate marketing and network marketing will depend on an individual's goals, experience, and preferences. It is worth considering both options and weighing the pros and cons before making a decision.

Featured
Image of Kademi logo
Kademi
Best Fit For: Global Channel Partner Management
Growann Rating ★★★★★
Need affiliate recruitment?
Connect to learn how we recruit partners for our clients.
Learn More >
Subscribe for More
Enjoying this article? Join the thousands who get the latest from Growann’s blog emailed other week.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Nick Cotter

Nick Cotter

Founder & CEO
Growann

With over 7 years navigating the intricate realms of marketing, and specifically B2B partner marketing, Nick has forged collaborations with top-tier tech brands, prominent agencies, and some of the industry's foremost B2B publishers and content creators. His deep immersion in both marketing landscapes showcases a trajectory of expertise and innovation. Identifying a significant void in specialized resources, he founded Growann.The aspiration? Deliver unparalleled insights and guidance, carving out a dedicated space where the broader marketing and B2B partner marketing communities can flourish.