This question has came up quite a few times recently so I thought I would show you guys the differences in affiliate marketing vs MLM. I also want to share with you which is more profitable. As many of you who visit here frequently know that I am an affiliate marketer. I review many other programs to see if they are worth your hard earned money or not.
Many of these, are multi level marketing products(MLM). In this post, I’m going to explain these 2 marketing platforms, and show you which one is going to work better for you in the long run.
What Is Affiliate Marketing?
With affiliate marketing you will be taking something you are passionate about and learning how to turn it into a long term profitable business.
I will explain how this entire process works below:
People search on Google for stuff everyday. This varies from doing research on a particular product or service first, before they buy it, to doing research on a company to see if they’re legit or not. What’s the last thing you Googled recently?
If you are reading this now then you have likely typed a search term into Google looking for more information on MLM vs Affiliate marketing. Am I right?
If you:
- Have a website with information related to their search
- You are ranked on the first page
- they click on your website
- Read your content and want more information
- They click on your affiliate link for more information
- They make a purchase
- You make a commission
You can sign up to be an affiliate for many popular merchants like Amazon, Walmart, Best Buy, or Target just to name a few. You are simply helping these companies sell more products and you get a commission every time the people you refer buys something.
It’s one of the most lucrative and most legitimate business models out there, and it’s been around since 1996.
What are some of the pros of affiliate marketing?
- Unlimited supply of products- With access to millions of products you have a wide variety of products to choose from.
- Unlimited earning potential- It’s your business and you can build it out as much as you want. You can make as much money as your heart desires.
- No sales experience necessary- With the right training program you can be up and running minutes after you get started
- FREE to get started– No upfront costs and your starter package comes with everything you need to start making money
- Very low cost to maintain and run your business each month
- Once you get your business running smooth you can operate it on autopilot
- A great way to start building up your residual income and grow your network online
Here are some of the cons
- There’s a HUGE learning curve- Many people give up after their first few months because there’s so much you gotta learn to be successful.
- You will be putting in lots of hours without being paid- When you first get started it takes time to get established and start getting people interested in what you’re selling
What’s Multi Level Marketing (MLM)
Even though this business model shares some similarities to affiliate marketing it digs deeper and crosses into where it becomes associated with some well know pyramid schemes.
MLM is where you will be recruiting people to join your team. The more people you sign up, the more money you can make. Chances are, when you sign up you were likely recruited by someone else. It’s your job to recruit other people into the business and get them to join your team.
If this sounds like a pyramid scheme to you, that’s because it’s right on the borderline of being one. The only thing that keeps this legal, and from not being labeled as a pyramid is that the company usually has a product or service that they use to get you to join.
There’s no training on how to market the product and 99% of the money you make will be trying to get others to join under you and build the pyramid bigger.
You will make money when the people you recruited recruits more people, and when their people recruit more people into the company. Confused yet? You should be.
Take a look at this infographic below to get a clearer explanation of what I’m talking about
As you see above you are going to need to recruit a ton of people and hope that they don’t quit. In my experience with MLM over 95% have been borderline illegal and I ended up losing a whole lot more money than I ever made with them.
You are in NO way building a long term profitable business. You are relying on the other people that’s higher in the pyramid to do the selling for you. You will also constantly have to recruit other people and convince them to join under you.
What are some of the pros of MLM?
- There are a few reputable MLM programs out there like Avon and maybe a few others
- If you are a great salesman and are good at recruiting lots of people you can make some decent money
Here are some of the cons
- You won’t have any long term success with mlm IF any at all
- It’s set up to much like a pyramid scheme and is borderline illegal
- If you’re not comfortable with recruiting your friends or family then this isn’t going to be something you would enjoy doing
- You usually need to invest into higher levels to make more money
- It can be very expensive to get started and you can lose lots of money quickly
- usually only 1% of people who join really make good money
- Most of the time you will be required to do cold calling to get leads (People to join under you)
What similarities does these 2 business models share?
With affiliate marketing you promote products and services to others which is the same as MLM, but you don’t rely on your team or have to recruit people. Instead of creating a downline like you do in MLM, you will be creating a long term business that you can grow as big as you would like.
Also with affiliate marketing you can earn passive income just like you would in MLM. The only difference is that you would only be paid on a single level, not multiple ones. Now while you may be thinking that you could make more money this way. You need to invest more money to be able to get paid on multiple levels like I have mentioned above.
In the long run you will end up losing more money than you make on these other levels.
So which business model would I recommend as being the most profitable?
Affiliate marketing is one of the best ways to create a long term profitable business online today. It has been around for close to 20 years now and it’s a multi billion dollar industry and growing more each day.
It’s also one of the most cost efficient ways to get a business up and running with absolutely no prior experience in marketing. When you are involved in MLM, it’s your job to go out and find people interested in what you have to offer. Most of the time you are encouraged to do this using unethical and dishonest techniques.
I also want to point out that MLM also uses different terms like “network marketing” and “top tier marketing” to fool you into thinking you aren’t joining another MLM company.
With affiliate marketing there’s no selling involved and people actually come to you looking for more information. Since they are already interested, all you need to do is help them out by providing them with quality information and point them in the right direction.
I would suggest that anyone looking for an honest and legitimate way to get started online, and looking to get started for FREE to definitely check out Wealthy Affiliate. They’re the reason why I have been so successful online, and I would love to help you do the same thing.
I really hope this has helped everyone out and has cleared up any confusion you may have had about these 2 marketing platforms. If there was anything I wasn’t clear on or if you have any questions for me I would love to hear from you.
Please leave your questions, comments or anything else for me in the comments below.
I will get back to you A.S.A.P
Your Friend, Scott
Here are a few other MLM/Pyramid schemes I have reviewed.
Check them out below:
Great write-up Scott!
Probably the best article I can find about MLM and affiliate marketing.
I actually have a background in offline MLM which I’m not very proud of. Although I did make some sweet cash, all of those are from friends which I convinced to join. All in all, I would choose Affiliate Marketing over MLM any day.
Keep up teh good work Scott, and Happy New Year 2015!
Hi Riaz,
I’m glad that this post has really helped you out and has cleared up a few things for you about these 2 business models. Basically MLM is all setup this way. You have to beg your friends to join under you so that you can build the pyramid bigger for the guys at the top, making them more money. I would definitely recommend Affiliate Marketing any day as it’s a more trustworthy and legitimate way to build a business online.
Thanks so much for stopping by Riaz and sharing your experience with MLM with everyone here.
Cheers
Your Friend, Scott
Hi Scott,
For me, affiliate marketing is a no-brainer. I was never into MLM and I certainly don’t intend to start now. If you have to work that hard and only the people above you are profiting from your efforts, then you might as well work for yourself and reap the rewards. In addition, I prefer to do something that I like, which keeps me motivated as well.
Hi Vanessa,
I have to agree with you when you weigh the good with the bad and compare these 2 side by side I’m afraid that AM(Affiliate Marketing) comes out on top. There’s entirely too much time, money, and risk involved when it comes to MLM and it’s not worth it. Also with MLM you are usually forced to promote the companies products. You aren’t able to getting started doing something you love like you can in AM.
You can also get started for free with AM with absolutely no risk so this outweighs anything that MLM has to offer.
Thanks so much for chiming in on this topic Vanessa and I hope you are doing well in your online business.
Cheers
Scott
I’ve not done either successfully, but I wouldn’t even consider MLM based on all the bad things I’ve heard about it. If I were going to try something like affiliate marketing, I would create a niche website first, then market to these people. I would set up a review site on the latest and greatest product or program to hit the universe and promote it with Gusto!
But the MLM I would pass on unless I was the founder! And that would be the only way I could see making money with that.
Rick
Hi Rick,
It takes time for both of these, but I would stay completely away from MLM unless you are cool with losing lots of money. This is the basic idea of how affiliate marketing works.I love your strategy you got for getting started with marketing products online. All you have to do after you get this strategy down is scale your business from there.
I agree that the only way you can make good money in MLM is if your were the owner. I think you would have a much better experience with AM and have much more long term success. Thanks for stopping by Rick and chiming in on this discussion.
Cheers
Your Friend, Scott
I too have spent years looking at “how” to build an online business. This article is the best explanation for Multi-Level Marketing (MLM) and Affiliate Marketing that I have ever read.
Looking back, I have been searching for the “right” opportunity for over twenty years.
I started out with MLM, Amway (Quickstar, whatever it is called these days. That was back in the day where there were weekly team meetings, weekly coordinated product pick-up (not very convenient for a single working mother). I was actually a re-tread, meaning I tried it 2 times over the course of several years, thinking that a “New” up-line might be better.
I did some research over the years and found that my “initial” upline built his business up and implemented a “you have to buy training materials” approach to his download that his peers eventually took over. Can you say, class action lawsuit?
Fast forward a few years and I started reading and learning about Affiliate Marketing. This was about eight years ago. I found a forum where supposedly all the AM gurus hang out. Don’t get me wrong. There are really successful people on that forum, however I found myself chasing after the next “legit” product to implement Affiliate Marketing.
I spent a lot of money over the course of the past eight years and I would not trade it for what I learned. Around nine and a half years ago 2 guys decided to start a website called Wealthy Affiliate. I wish I would have found WA back then.
The important thing is I have found WA and it’s so much more that just training. No spam allowed, experts online from all over the world, a community of people helping each other.
I especially like the focus you put in this article about people learning to build affiliate websites based on THEIR passion. All the other Affiliate Marketing training (or a majority of it) is focused on the “make money online” genre.
Hi Susie,
I’m glad that this article has opened your eyes as too the differences in an AM bussiness and a MLM business. It was actually close to 20 years for me as well searching for an online business opportunity that was legit. I knew there had to be something out there because I was so sick of working the 9-5 and not being about to enjoy life due to being overworked and underpaid.
It sounds like you have been a part of both of these business opportunities and you have quite a history in several programs. I remember Amway from way back in the day. I never was a part of them but I have had many friends who were. One of the many things I hate about these companies is you are forced to buy into these ridiculous overpriced products that you don’t need just to be able to move up to the next level.
I’m so glad that you found out about AM and that you were about to get hooked up with WA. Out of all the companies I have been a part of Wealthy Affiliate is the only one that has actually helped me build a very successful business online. AM has changed my life in so many ways that I can’t count them all and this can be a reality for anyone who truly wants to be successful online. The fact that anyone can take a hobby of theirs and turn it into a full time business is absolutely awesome I think.
It was really nice of you to stop by and share your experience you have had with both of these business models with everyone here and If I can ever help you out with anything please let me know.
To Your Success
Your Friend, Scott
Hi Scott!
Good job on this article!
I’ve been involved in numerous MLM ventures – I’ll never do it again, that’s for sure!
It did nothing but sap my time, energy, effort and finances.
I agree with a lot Leo says – … and the fact that you HAVE TO buy products no matter what, does not sit well with me either, and I’m not one that likes to “push products”.
For me – it’s affiliate marketing all the way!
There are so many more benefits as far as I’m concerned.
Great post Scott!
Joanne
Hi Joanne,
MLM can be a very risky investment especially when over 95% of people who join fail to make any money with it. I have also been involved with a number of these programs in the past and I didn’t get anywhere with them. I agree with you that it does a good job of draining you of your time, energy and money and will leave you with nothing in the end.
Affiliate marketing is definitely the better route to go if you want to truly create success online in absolutely any niche you can think of. I really do appreciate you dropping by and chiming in on this topic Joanne and I hope your business is doing well.
Cheers
Your Friend, Scott
Hi Scott,
This article really does break down the pros-cons of MLM vs Affiliate marketing to a very understandable level.I have tried several MLM programs in the past and none panned out for me. I always believed that the internet was the place to start my own business. I just never knew how, and I didn’t have the right training or help and support to enable me to get started. All of that changed when I found WA! Working to build my own business through WA has been very rewarding and real. I’m talking about a long term repeatable business in a niche I love…Great job and I look forward to your future posts!
All the best-Tom
Hey Tom,
People need to know the differences in these 2 marketing platforms as well as what options they have when getting a business started online. There has been so much debate on this topic lately. I thought I would make it clear as to which business model is your best bet when trying to create a long term profitable business online.
Like you, and many other people, I have also dabbed into MLM as well and I was never able to make a dime with them. Actually, right before I found WA I joined Ameriplan (Another MLM company)
I actually thought this company was great when I first started, but I soon found out that they weren’t any better than the rest of them so I got out right away. I agree with you that Wealthy Affiliate is the best place to learn everything you need to know about running an AM business.
Thanks so much for stopping by Tom and sharing your experience with both of these business models. I wish you lots of success in your online ventures and if you ever need any help or have any questions please let me know.
Keep in touch
Your Friend, Scott
I was going to try MLM but after doing some research it’s really not that great of an opportunity for many reasons, one of which was being a salesperson – no thanks.
But here’s the two BIG reasons that stood out for me and why I did not want to get involved.
1) You’re forced to buy products every month whether you need them or not in order to keep your business going and to get paid and to even qualify for company bonuses.
2) If you read the TOS of many MLM companies they can terminate your business for any reason.
And I have seen it happen where peoples businesses have been wiped out overnight.
Not to mention most of these so called super products are over priced and no better than products that can be found in retail stores for less money.
With affiliate marketing I’m not forced to purchase a certain amount of product each month to keep my business alive and in order to get paid – I’m not a hostage.
Affiliate marketing is much more flexible and it aligns better with people because they can build a thriving business around the things they love (hobby or passion)
Giving people a much higher rate of success because they’re already going into business with something they’re very interested in and know very well.
Not being told this is what you have to sell to make money. Also no one wants to be a sales person.
No wonder 97% of the people that get involved in MLM quit within the first year.
With affiliate marketing there is no selling, you’re just sharing your hobby or passion and then have aligned yourself with companies that have products related to that passion or hobby.
And I know affiliate marketing works because I have been making a full time income online as an affiliate market since 2005.
Hi Leo,
I have tried many MLM opportunities and I wasn’t able to make a dime from any of them. As a matter of fact and as I have stated above I ended up losing a lot more money than anything else. People get sucked into these programs thinking they are gonna make a million dollars in a couple weeks. Once they buy all these ridiculous products that you need to level up thinking they will make more money this way, they get disappointed when they don’t end up making any money at all.
I also agree with you that they can terminate you for NO REASON. They usually wait till you have built up a pretty nice residual income for yourself before they pull the plug on your campaigns. Here’s one person in particular who was a member of Ameriplan (A MLM company I got mixed up with) who actually had this happen to him. Check out his story here
There are quite a few other people who had this happen to them as well. When you are involved with MLM you are in no way creating a long term business that will grow over time. Any success that you do have with it is going to be short lived and you are setting yourself up for failure down the road.
I agree that AM is so much more flexible and room for you to grow your business as much as you want. You can get started for FREE and your monthly cost are really low compared to other business models out there. Another thing I like is that you can start out in absolutely any niche or topic of interest and build a full time business doing so.
People actually come to you instead of you having to go out and find them and I find that absolutely awesome. I haven’t been making a full time income from AM nearly as long as you have Leo but I have been doing this for 2 years now and I love it. Thanks so much for stopping by Leo and sharing your thoughts with everyone here on these 2 business models.
Cheers
Your Friend, Scott
Hey, Scott
I like your take on affiliate marketing and MLM, and there are pros and cons of each one. However, I am both an online affiliate marketer and an offline network marketer, so I see things from both angles.
Affiliate marketing takes hard work and patience, but the results can be awesome within 6-12 months of starting up an online business.
Network Marketing is great fun and also rewarding, but people must be prepared to build teams, attend networking events and work longer to see the big money.
MLM can be the same, but it does have a bad reputation because of the likes of Empower Network and other scams.
I would say though that affiliate marketing is the better option for any newbie in my opinion, since it’s easier to learn the basics of making extra money.
Neil
Hi Neil,
I agree that both of these business models can be profitable if you are willing to devote the time it takes to be successful with them. I have tried many MLM opportunities in the past, and I can see how the right person could make money with them. For me personally, I ended up losing more money than I ever made with them and I wasn’t interested in joining a team and recruiting other people.
One of the many things I like about affiliate marketing the most, is that people are already interested and they come to you instead of you having to go out and find people yourself thats interested. You can create success for yourself a lot faster this way and actually feel good about what you are doing because you are helping other people out.
Thanks so much for sharing your views about MLM as well as affiliate marketing Neil with everyone here and I hope you had a very Merry Christmas.
To a successful year ahead
Your, Friend, Scott