In this article, I'll be sharing with you a side by side comparison of both business models.
I am confident that after reading this article on Affiliate Marketing vs MLM, you will be able to clearly identify which one is more worthy of your investments - both time and money.
And although I humbly suggest that you read the entirety of this article, I understand how valuable your time is. So just in case you are in a hurry, I have prepared a Quick Navigation table for you.
Before we address the elephant in the room, a little hiatus.
What do you think is the first challenge any entrepreneur has to overcome before he or she can start a successful business?
Back then my answer would be “capital” or money but in reality, having the idea of what you want to do with your money comes first.
Choosing the right business model to begin with is crucial. Investing on something that you are passionate and fairly knowledgeable about will give you a head start in any business.
You would not want to invest in a business model that you do not clearly understand and does not interest you. This is one of the reasons why many people immediately fail in their businesses only after 3-6 months.
You wouldn't want that, do you?
Why Should You Listen To Me?
I am both a professional network marketer and an experienced affiliate marketer, which I think qualifies me to share my two cents about this matter - all based on my actual experiences.
In the past years, I have tried and tested both business models, and I manage to make money on both.
But one of them, in particular, allowed me to generate a 6-figure monthly income which is my bread and butter today. But more on that later.
Regardless, both AM and MLM can potentially make you rich and be financially free “IF” you have the right set of skills, knowledge, and attitude.
So without anymore delays, lets' begin.
Affiliate Marketing vs. Multi-Level Marketing
#1 Business Models
The best way to start illustrating the differences between AM and MLM is by taking a closer look at each of their business models.
What is Affiliate Marketing?
Affiliate Marketing, in general, is promoting other people’s products or services and making a commission out of each successful sale.
Here is a video which explains clearly what Affiliate Marketing is:
Affiliate Marketing in a nutshell:
- Build a website on a niche of your choice (must have something to do with your passion or hobby)
- Choose the affiliate products that you want to promote
- Help buyers make an informed purchasing decision by creating informative and helpful contents
- Create original and high-quality contents (blog, product pages, reviews) promoting your affiliate products
- Earn commission whenever people come to your site and decide to purchase anything through your “affiliate link”
What Is Multi-Level Marketing?
MLM in another hand is just like a traditional direct selling company with additional bells and whistles.
To better explain what Multi-Level Marketing is, it is best to compare an MLM company to a traditional one.
Both a traditional company (for example Coca Cola) and an MLM company have products to sell (manufactures or import them).
But the big difference is...
Whereas a traditional company will spend a humongous advertising budget on promoting and introducing its products to the mass market...
MLM companies do not need to pay a cent for advertising.
An MLM company will pay ordinary people like you and me to promote its products by offering a percentage of each sales as commissions. Once you become an MLM distributor (member)...
You will then tap into your network (for example our friends, colleagues, and family) to promote the products of your MLM company.
This strategy where the MLM company utilizes the network of ordinary people to move their products from the manufacturer directly to the end users is called “Network Marketing.”
Perhaps you will be more enlightened about what is MLM by reading this article.
#2 Business Ownership
The fantastic thing about Affiliate Marketing is that you have total control of your business. You can hand pick the products you feel like promoting.
First, you need to pick a niche that you are passionate about.
(Take note how I always mention passion into the whole process. I will discuss why in a moment)
Once you have chosen a particular niche, you can then choose which products you want to promote to the people who basically has the same interest as you.
Make no mistake, you do not have to sell any of these products. All you need to do is present and promote your affiliate products through your website.
Think of yourself as a middleman but instead of reaching out to people one by one, you create a website and make these people find you.
You then provide information and direct them to the products that you believe will benefit them the most.
If you are not sure what a Niche is, you may check out this video below:
In an MLM business on the other hand...
You do not have the freedom to pick the product line that you will be selling. Moreover, you also do not have control over the prices for which you will be selling these products.
You have to stay in line with what products your company is selling and follow their guidelines.
You are more like a sales representative than an actual business owner. Only, you have the freedom to do the business whenever you feel like it.
#3 Cost To Get Started
Both AM and MLM will require an upfront monetary investment when you decide to start.
Base on my experience, legit MLM companies usually require membership fees ranging from $50 up to $500.
The price differs from one MLM company to another. Often, the membership price you pay will determine your ROI (products or services) and your earning potential in an MLM company.
You might also want to invest in excellent network marketing training programs to equip yourself with the proper skills and knowledge about the business.
These are the Best MLM Training Programs you might want to take a look at.
Starting a business with Affiliate Marketing typically cost less (much less) than the standard MLM membership fees. This is because you do not need to purchase any product to sell.
You just have to build your website which believe me, has become a whole lot easier today. You might need to pay for an Affiliate Marketing training course and generate paid traffic to your site, but that's about it.
There are even Affiliate Marketing courses for beginners that offers a free trial period, just like this program.
#4 Source Of Income
In Affiliate Marketing...
Your website is the primary source of your income. Again, you do not have to "literally" sell your affiliate products nor do you need to keep an inventory.
Your responsibility as an affiliate marketer is to provide the information that people needs regarding your affiliate products.
Your contents must reflect not only the good side of your products but also its issues and shortcomings (if there are any).
That way, people will be able to decide on whether your affiliate products is the one that they need.
And when people purchase your affiliate products thru your affiliate link, you will earn a commission on the sales, even while you are sleeping.
On the other hand...
Although many people think that Affiliate Marketing and MLM are the same, there is actually a huge difference, especially how you generate your income.
As an MLM distributor, you need to be more hands-on and involved with your business. There are two ways you can earn money thru this business model - direct selling and recruitment.
While you do not have to go outside or even personally interact with people to make sales with AM, selling your MLM products is the opposite.
You have to purchase your products from your MLM company at discounted prices, and you have to keep them in your own inventory and storage.
You then sell these products to other people at marked-up prices. You will keep the profits you make on each sale.
MLM Compensation Plan Perks
However, to take full advantage of your MLM business...
You have the option to build an organization by recruiting/sponsoring people to be part of your own team under the same company. These people are commonly referred to as your “downlines” in the MLM industry.
Most of the time, an MLM company will pay you for recruiting new people into the company. What's even better is that as your organization continues to grow, you will not only earn thru personal product sales and recruitment.
You will also make money when your downlines make a sale or have recruited someone else.
Making money with an MLM compensation plan might require a lot of work compared to Affiliate marketing, but you will have the potential to grow your network and leverage other people’s efforts to increase your income massively.
Is MLM a Pyramid Scheme?
In many incidents, MLM companies were implicated as a pyramid scheme. The truth is, not all MLM companies are pyramid schemes.
A pyramid scheme basically means that the operation of the MLM company purely relies on recruitment and there are no products involved.
In pyramid schemes, the top people on the pyramid chart makes the most money while the bottom few funds the income of the top earners.
Yes, MLM is very close to a pyramid scheme but several legitimate MLM companies have been on the market for many years.
You may even be familiar with them including:
In addition, the video below teaches you how you can avoid falling into a pyramid scheme and what are the tell-tale signs of one.
#5 MLM and Affiliate Marketing Advantages
It's undeniable that you can make money from both business models because they are all legit businesses that works.
Below are the advantages of having an MLM or Affiliate Marketing business.
- You can build additional sources of passive income streams. This is in addition to your current 9-5 job or other businesses.
- Secondly, these business models will not cost you thousands of dollars to get started. As a matter of fact...
- You can immediately start your Affiliate Marketing business or join an MLM company right after reading this!
- Lastly, you can start by doing these businesses part-time while keeping your full-time job.
#6 Challenges of MLM and AM Businesses
There are also specific challenges that you need to overcome on each business models if you wish to maximize your chance of success.
For starters, Selling and Recruiting is not easy in an MLM industry. If someone is telling you otherwise, then I am sorry to say that it is not true.
On the flip side, the biggest challenge in running an Affiliate Marketing business is how to drive traffic into your site.
Either way, to be successful in Affiliate Marketing or Multi-Level Marketing requires lots of hard work, dedication, patience and time.
But I guarantee (and I am the living proof) that if you work extremely hard and find ways to improve yourself, amend whatever that is not working and LEARN your business...
You will eventually find success.
One day (hopefully sooner than you expected), you can live on your passive income from either MLM or Affiliate Marketing business that you would be able to fire your boss!
Just like I did.
#7 Overall Success Rate
Alright, on this part of the Affiliate Marketing vs MLM, I suggest that you buckle up your seat because its time for some hard, cold truth.
All across the entire MLM industry, more than 95% of the distributors fail on their respective companies.
Unfortunately, this is not some made up number to scare you.
This is the consensus in the industry. In fact, the FTC even released a case study revealing MLM’s abysmal success rate.
No matter how much you grind and try your best with MLM, the numbers are stacked against you. It is just the way it is because a lot of things in the MLM business are out of your control.
This is why you can easily find people claiming that MLM is nothing more than a legalized pyramid scheme.
On the other hand...
It is also safe to say that a large percentage of people who started an Affiliate Marketing business ended up not making money at all. Maybe even the same rate to that of MLM.
However, the reason why you cannot find many complaints about people not making money in Affiliate Marketing is because when an entrepreneur fails in this business...
It is most likely due to his own shortcomings and not by external forces which he has no control over.
There are no pyramid schemes in Affiliate Marketing. There are no fake products, no fake promises, and you will always get paid.
For your reference, these are the 7 most common reasons why people fail to make money with Affiliate Marketing.
Affiliate Marketing or MLM -
Which Is Better?
Although I find myself leaning a little towards Affiliate Marketing due to the reasons above, I honestly think that the answer to this question depends on you.
First of all, which among the two is something that you have the passion for doing.
Because no matter how fantastic a business opportunity is and how the odds are on your favor, what matters most is if you are doing something with your heart.
When things get rough, your PASSION is what will drive you to success!
If selling products and recruiting people to make money is up to your alley, then I recommend the MLM business model.
If you would rather stay at home and earn passive income by creating high-quality contents and optimizing your website so people can find the products that they are looking for...
Then you might be more suitable with Affiliate Marketing.
My Sincere Advice
I repeat, both these business model have merits and can potentially give you the life that your current 9-5 job can never offer.
If you are really serious in stepping into my shoes and follow my footsteps towards a 6-figure monthly income, I suggest that you learn and familiarize both these business models by the heart.
I will tell you right now, the journey will not be easy, but it will be worth it in the end.
If you are set into getting started with an MLM business...
I recommend that you master the art of selling and recruitment with Attraction Marketing.
This powerful strategy will allow you to find the right people for your business and grow your network in no time.
Meanwhile, if you prefer to get started with Affiliate Marketing...
This fantastic training program for beginners will take you by the hand.
It will teach you how to create your website, choose the perfect niche for your business and how to rank at the top of search engines.
Thank you for taking the time to read this article on Affiliate Marketing vs MLM. Have you found the answers that you were looking for?
I certainly hope so.
And if it isn't too much to ask, kindly share this article to the people you know who might need this kind of information.
Furthermore, if you have questions regarding these two business models, feel free to contact me, and I will be more than happy to help you in the best of my abilities.
Until next time and remember, whichever business you decide towards financial independence, make sure that it is something you are genuinely passionate about.
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Jack is an experienced online marketer who has a passion to help beginners succeed online.