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“What is the difference between MLM and affiliate marketing?”
I’ve been asked this question a few times, so I’ve decided to show you the differences between the two and which one I prefer plus why.
The two are actually very different and I prefer one over another for many reasons which has to do with flexibility and choices.
Let’s get right into it:
- VIDEO: My Walkthrough of Affiliate Marketing vs MLM
- Main Differences Between Affiliate Marketing and MLM
- What Is Multi-Level Marketing?
- Pros & Cons of MLM
- What Is Affiliate Marketing?
- Pros & Cons of Affiliate Marketing
- What I Prefer & Where You Can Get Started
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VIDEO: My Walkthrough Of Affiliate Marketing vs MLM
Here’s a quick video of this post for easier consumption I hope:
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Main Differences Between Affiliate Marketing and MLM
Here is the spiffy little chart that I had in the above video about the main differences between affiliate marketing and multi-level marketing:
The main reason why I like affiliate marketing better is because of that very first factor which offers lots of flexibilities and opportunities.
Not only that, you are not dealing with inventory or have to worry about profit margins when you can just earn a % of sale which is quite straight forward and clear.
You also have less costs in the beginning of your business if you choose affiliate marketing as you really just need a blog to get started or just start uploading videos on YouTube.
It is the ease of entry and simplicity of the affiliate marketing business model that makes it a winner for me as the best way to start an online business.
What Is Multi-Level Marketing?
Multi-level marketing or MLM is a form of direct selling where you, as a representative, will sell products to consumers.
You’re going to join a team, where all of you are going to promote the same products and services. This means that you’re going to be stuck with the same company and products.
It’s called MLM because earning from this kind of business is either buying products at wholesale and selling it at retail for profit or you recruit other people to join your network.
Once you recruit these people, you’ll earn commissions from each sale they make and from the people they successfully recruit to join.
Getting all this information will make you think if it’s like a pyramid scheme. But, it’s not because they are selling retail products to consumers and revenue is not only generated by people within the organization.
What happens in pyramid schemes is that people pay to be part of the network and there isn’t really any product or service being promoted.
What these people do to earn commissions is to keep recruiting others to pay to become part of their network and ask them to recruit too so they can earn commissions as well.
With MLM, they make sure to keep their operations legal by choosing an actual product or service to promote by the network.
So, while MLM gigs are legal, that doesn’t necessarily mean they’re effective because
However, MLM is not entirely bad. You might have heard a lot of negative stories about MLM marketing, but there are also people who have been successful in this business and made a decent income.
Pros and Cons of MLM
- Financial independence – A lot of people invest in becoming independent consultants because it offers them a huge opportunity of earning a decent income. Whether they do it part time or full time, they have the chance to make money to meet their needs.
- Growth opportunities – In MLM, consultants are taught how they can achieve something so they can grow their network and profits. Since they receive a percentage for the profits of their recruits, they have the chance to increase their investment and income.
- Flexibility – What many independent consultants love about MLM is how they can work in their preferred hours. Business-minded people love it when they can work as many hours as they want so they can make more money and that they don’t need to follow any schedule.
- Few benefits – Working as an independent consultant means you’re not like typical employees who enjoy company benefits, like paid vacations and health insurance.
- There’s a chance that you’ll be connected to an untrustworthy company and it turns out to be a pyramid scheme. This is actually common these days with digital products, which is why many people are having doubts about entering this kind of business. Two big companies were shut down recently in 2018 by the FTC, read their stories here and here, because they had no retail products and just memberships people paid in to get licensing rights to earn huge commissions.
- Costs are high to be involved with a MLM because you have to buy inventory, store inventory, and have a start up cost that’s usually at least 3 digits to start, most around $1K or more.
- Because of all the MLM companies out there and the concerns about getting scammed, getting sales is becoming harder to achieve.
- Stuck with working with one company and one set of products.
What Is Affiliate Marketing?
Now that we’ve covered the MLM part, let’s talk about affiliate marketing and see how it differs from multi-level marketing.
Affiliate marketing is an arrangement wherein online businesses and sellers pay someone (an affiliate) a commission for driving new sales to their products and/or services.
Depending on the arrangement, affiliate marketers get a commission for each new customer sale they drive for the products and services they promote or they get paid for every lead they bring to the company’s targeted site through their affiliate link.
Affiliate marketers have choices, they can work with one company or multiple companies, they are not tied to one.
This also means they are not tied to only one set of products either, instead, they can choose from a range of products, basically whatever is in the online market.
They do not earn from recruiting like the MLM, actually nobody needs to recruit as an affiliate marketer, they just need to refer because affiliate marketers do not earn commission from the work of others.
They only earn when they drive new sales for products/services they want to promote or whatever action that will trigger the commission (so could be leads, or email sign ups, etc).
Costs to get started as an affiliate marketer is very cheap because it’s usually free to apply to affiliate programs, I rarely apply to those that are require a fee to join.
You can start with only $49/month (or cheaper if you pay for 6 month plan or Yearly plan) if you want to learn how to build an affiliate marketing business.
As an affiliate marketer, you get to learn online skills that MLM companies don’t really teach because they mostly tell you how to place ads.
Placing ads will be very expensive, especially if you don’t know what you’re doing with online ads.
Look at me as an affiliate marketer, I pay zero dollars for the thousands of visitors I get on my website here. These are skills that won’t be taught by MLMs.
Below is my traffic for Jan/19 per Google Analytics, 45K visitors without paying a dime for it!
This graph shows where my traffic comes from, 91.3% organic traffic from search engines! Feb 4’s traffic was 1,941 users.
Do you know how much money this is equivalent to if I were to pay for this kind of traffic?
Thousands of dollars, in the 5 digits.
Pros and Cons of Affiliate Marketing
- It pays well. A lot of people now are starting their own affiliate marketing campaigns because it is proven to be one of the most effective ways to make money online. It’s not necessarily easy, lots of hard work needs to be put into it because it’s a performance-based kind of work. However, if you put enough effort, you will surely earn in this business. See my results from last year here.
- Flexibility. Being an affiliate means you are your own boss. You’re in charge of your working hours and the strategies on how you’re going to reach your goals. You can literally work anywhere while wearing your jammies.
- Offers a lot of opportunities. Being an affiliate marketer doesn’t limit you to promote one company. You can promote others, as long as they fall into your niche. You can earn from different products that are available online. With MLM, you’re limited to one company and the products and services they offer, which makes the competition harder since you’re also competing with the other recruits.
- Another great thing about affiliate marketing is you get to choose the products to promote. In most cases, you choose products that you have knowledge and experience, which makes it easier to sell but you can promote products you haven’t used as well just like a car sales men who’s never bought every car they have ever sold, it’s just about research and providing people with valuable information.
- Costs are low. Many affiliate programs are free to sign up, and even if there’s a fee, it’s usually at a low price. All you need is a domain and web hosting which can be all very cheap!
- Long working hours with results not immediate. When using a long term approach to affiliate marketing, there’s a lot of work in the beginning to be done but all that work will blossom into results down the road. Many affiliates who are now earning six figures had to devote a lot of their time to reach where they are now.
- Unstable business – Affiliate marketing can be unstable for others, even for those who have already been doing this for a long time because affiliate programs can change without notice. For new affiliates, they’re going to meet a lot of bumps on their journey ahead and you will need perseverance if you’re going to succeed in this business.
- Scammers are growing – People trying to learn affiliate marketing are being scammed left and right by unethical product owners who make high income claims but deliver nothing of the sort after you’ve put down money so it’s been hard for people to really learn how to do this.
WHAT I PREFER & WHERE YOU CAN GET STARTED
Affiliate marketing and MLMs are very different and the main difference between them is you have more control when you’re an affiliate marketer.
You get to choose the products you’re going to promote and sell. You’re the one who gets to decide how you’re going to market these products, how you’re going to set up your website, etc.
With MLM, you’ll only be promoting the products that are available in the company, regardless if you have experience with it or not. Also, you somewhat depend on how many people you can recruit to promote and sell on your behalf.
These are the reasons why I prefer affiliate marketing. I want to have full control on my own online business and the income I receive.
With that said, I don’t mean to put a bad light on MLM, because I know that some people really did make a decent income through MLM companies.
In fact, the skills I’ve learned to get all that free traffic can be applied to any MLM you want to promote.
But, personally, affiliate marketing is better because it’s also about helping others. Before you start earning in this business, you have to help your target audience.
By helping them, they will eventually turn into happy paying customers.
Where to Get Started
If you want to get started in affiliate marketing, or learn the online marketing skills like I have, and don’t want to be scammed, then check out the training platform I’ve been using in my money making guide here.
The affiliate marketing training platform I have been using since Sep/16 is responsible for teaching me everything I know about affiliate marketing and helped me earn $40K in 2018!
Check out my free guide now here:
If you have questions about MLM and affiliate marketing or got something to add to this post, please don’t hesitate to leave me a comment below! I always reply to my readers! 🙂
Let’s make money online!