Affiliate Marketing vs Multi-Level Marketing (MLM)

Are you looking to take your brand to the next level? Have you been wondering which, between Affiliate Marketing and Multi-Level Marketing (MLM) will do the trick for you? Hie, my name is Francisco, and I am the owner of Planet Marketing, a Digital Marketing Agency. My company specializes in Google Ads, Facebook Ads and Affiliate Marketing. So, everything that I talk about in this post is based on my own experiences. I have been in business for over a decade and have full understanding of both Affiliate Marketing and MLM. In this Affiliate Marketing vs Multi-Level Marketing article, I am going to;

1. Define Affiliate Marketing
   
2. Define MLM
   
3. Show the differences between affiliate marketing and MLM
   
4. Advise you on which to choose for your brand
   

What’s that animal called Affiliate Marketing?

Wish to learn more about the world of Affiliate Marketing? I am just the right person to teach you everything that you need know. Not only am I an affiliate for other companies, whose products and services I sell via my website, but I also run my own affiliate marketing program in-house. I, therefore, have a clear understanding of what I am talking about in this article! So, what is affiliate marketing? Let me use examples to get the point across;

An example of Affiliate Marketing

Let’s assume here that a company, that we shall call HealthyX, has come up with a revolutionary gadget that’s designed to monitor a person’s blood pressure, with the results being uploaded to their Smartphones. I know, such gadgets are already on the market today, but just bear with me for the sake of this article. Anyway, HealthyX has the gadget, but it does not have the customers. Not that there is a shortage of people who could use the revolutionary device. No; what’s lacking is the ability to reach the right kind of audience. Now, it’s possible for the company to use Google Ads, Facebook Ads and other marketing channels to get the word out about the newfangled device. But that’s not what we are talking about here.

Anyway, the company then decides to hire the services of multitudes of bloggers, YouTubers and other content creators to help spread the word. These people are paid according to the number of sales that they have made. Doing this opens up HealthyX to a whole new world of marketing. Instead of trying to spread the word using only the company’s blog and it’s Facebook Page (that nobody probably has ever heard about), now the company has the ability to reach out to millions of people using the linkages that have been created by these content creators. That’s affiliate marketing for you. The brand, HealthyX, hires affiliates to help sell a product or service. In return, the affiliate is given an agreed to commission per sale.

How to succeed in Affiliate Marketing

A large chunk of the people who set out to become affiliate marketers never actually succeed. In fact, only 1% end up doing it on a full time basis. So, how can you avoid becoming part of these rather depressing statistics?

• Treat it as a business: You need to treat your affiliate marketing venture as a business. If you are only doing it part time, then you are going to only get less than stellar results.
• Find low hanging fruits: Most of the affiliate marketing niches that are out there are saturated. If you want to make it as an affiliate marketer, you need to be able to find one where the competition is not so fierce. That way, you will have the chance to make meaningful sales.
• Find a product that sells: Most people make the mistake of signing up for every affiliate marketing product that they come across. That is not the right approach. There are probably thousands of affiliate marketing programs out there, and you are not going to be able to sign up for all of them. What you need to do, however, is to sign up for the ones that are in sync with your content marketing thrust. If, as an example, you own a blog that focuses on children’s toys, you are not going to have much success trying to sell home insurance to your audience.

Advantages of Affiliate Marketing

One of the major advantages of affiliate marketing is that commissions are based on performance. As a brand, you know that you are only going to pay people when they produce the desired results. And the affiliate really has an incentive to go out there and market your products and services. That’s because the more the sell, the more they are going to be able to earn.

Disadvantages of Affiliate Marketing

Affiliate marketing does have it’s fair share of disadvantages. For one thing, the affiliate has not control over the program. He or she simply has to go along with whatever the merchant decides in terms of pricing and other issues. Affiliate marketing also tends to be flooded. There are some areas where the competition is so fierce that you shouldn’t even bother trying to get in. Affiliate links can also be hijacked, thus confusing the entire program. However, this rarely ever happens.

Learn more about Affiliate Marketing!

I will not dig deeper into Affiliate Marketing in this article. If you really wish to find out more, feel free to check out my article on how affiliate marketing works. Now, it’s time to discuss multi-level marketing.

What is Multi Level Marketing (MLM)

Okay, Affiliate Marketing is easy enough to understand. The lines are very clear cut. There is the brand/vendor, merchant and then there is the affiliate or publisher. Sometimes, there is an Affiliate Marketing Agency that interposes itself between the two. Yet the relationship between the parties are easy enough to grasp. How about Multi-Level Marketing? Isn’t it, more or less, the same thing?

MLM is sometimes referred to as network marketing. That’s because it relies on the creation of networks whose primary purpose is to perpetuate their very existence through the continued recruitment of new members.  

MLM members are not all equal. That’s why it is referred to as Multi-Level Marketing. But what does this mean? Well, it simply means the benefits tend to degrade the lower you go on the ladder. Those at the top can expect to reap the full benefits, while those at the bottom are there to feed everyone else. Of, course, they too can get off the bottom by recruiting new members, but I get ahead of myself.

How does MLM work?

Let’s assume that HealthyX, the company that we are using in our example, has decided to go the MLM way when it comes to reaching new customers. Now, it reaches out to a blogger, Joe Blogger, who agrees to BECOME A MEMBER of the team that’s promoting the wonderful invention that monitors blood pressure. Take note that “becoming a member,” is part of the key terminology in MLM. Usually, a person does not sign up to sell something. They become a member of a team that’s promoting that something.

But where do the tiers come in? Well, Joe Blogger may or may not actually buy the newly invented gadget that we are talking about here. Or, if he is particularly enterprising, he may buy a number of them for resell. Now, the idea of it being a tiered process comes from the fact that the relationship between Joe and HealthyX does not just end there, with the two of them. Instead, Joe gets encouraged to go out there and RECRUIT other people to become ambassadors for HealthyX.

So, being the enterprising guy that he is, Joe Blogger will first approach his mother, his friends and everyone else he knows in an attempt to convince them to become MEMBERS of the team that’s selling the wonderful device that’s manufactured by HealthyX. Of course, quite a number of these people will think the entire thing is a Pyramid Scheme. However, they will be too polite to tell Joe to beat it.

Let’s assume that Joe has managed to convince 10 people to JOIN the team. Joe is at the top level, while these ten people are a level under him. The great thing for Joe is that he will get a percentage whenever someone that he convinced to join makes a sale. What then happens is that these people will reach out to their own circle of friends and family, among others, to convince them to also become part of the team.  And whoever signs up from there becomes part of the third tier. Whenever a sale is made, not only does money accrue to those on the second rung, but Joe Blogger, who is at the top of the ladder, also gets a cut of the profit. Hence the idea of Multi-Level marketing.

Advantages of MLM

MLM can be wonderful or useless, depending on your position on the ladder. Usually, people who are first to hear of such schemes are the ones that benefit the most. For the rest, benefits diminish as they go down the levels. The following, in any case, are the advantages of MLM;

• Those
  that have the ability to convince people to buy stuff (whether they really want
  to or not), will obviously make a lot of money through MLM. That’s because the
  more people you convince to join, the more the profits that are going to accrue
  to your account.
• MLM
  allows you to work from home. You don’t need to worry about a boss breathing
  down your neck all the time and berating you about your failure to meet
  deadlines.
• From
  the point of view of the brand, MLM can become a self sustaining marketing
  tool. One person signs up, and he or she convinces ten people to sign up.
  Before you know it, there will be a thousand people talking about a product or
  service.

Disadvantages of MLM

The following are some of the disadvantages of MLM;

• I have already mentioned that MLM schemes tend to sound like Pyramid Schemes. One person joins and they need to convince others to also join. Along the way, it can become all about increasing the membership and nothing about the actual product that’s supposed to be sold.
• It can, therefore, become very difficult for you to convince other people to become part of the scheme. Under MLM, you are not simply selling a product. You are selling membership into a community. And most people are reticent about joining things they have never even heard about before your knock on the door.
• Those that are mediocre at salesmanship will find the going tough. Under MLM, you will only be rewarded the more you can convince other people to become members.
• The competition can fierce. You will want to be really good to make it.
• Some of the MLM programs that are out there demand the payment of an introductory fee. That is part of the reason why so many people are rather suspicious when it comes to MLM.
• The MLM model is really difficult to sustain. It is difficult to see a company breaking even while only selling a product or service to people within that product or service’s community.
• You need lots and lots of time to be able to recruit enough people to put you at a level of the pyramid that’s enough to make money.
• Commissions tend to be lower for those that are at the bottom of the pack. If you are at the bottom, you are going to need to share your commission with everyone else above you on the pyramid. This goes all the way up to the guy at the top, who gets a share of the commission accruing to everyone that’s below him or her.

What’s the difference between Affiliate Marketing and MLM?

This is something that, I think, I have already touched on in the preceding discussion. MLM and Affiliate Marketing, at face value, sound similar. They are both, after all, about recruiting members to help sell a product. The following, in any case, are some of the differences between the two;

• Affiliate Marketing is more focused on the product. What you are trying to sell to your readers, viewers and listeners are products and services for the company for which you are an affiliate.
• MLM, focus is more on membership. What you are trying to do is get as many people as is possible to sign up for the scheme. The product or service takes the back-burner. It can, in fact, get almost completely forgotten! People become so focused on trying to get other people to sign up that the primary purpose of the existence of the community becomes lost.

Which one should you go for

So, which one should you choose, between affiliate marketing and MLM? Here, it’s important to look at this topic from the point of view of both the brand/merchant and that of the affiliate;

Should brands opt for Affiliate Marketing or MLM?

MLM, it has to be said, has a bad rap. I mean, if you try to explain it to most people, they will walk away, thinking it’s such and such a Pyramid scheme. That’s really because it’s more or less just that; a pyramid scheme. If you are a serious brand that wishes to push its products and services, then you will probably want to stay away from MLM. Otherwise, you will be bound to lose credibility. But why is that the case?

The primary goal for most businesses is to generate profits through the sale of products and services. You can do this through affiliate marketing. With affiliate marketing, focus is on the product. Whereas with MLM, membership takes precedence. The result is a chain of people who are only interested in signing up others who will be placed below them on the pyramid. So, what’s my advises to business? They should stay away from MLM schemes. They are usually a good way of damaging a brand’s reputation.

Should publishers choose Affiliate Marketing or MLM?

As the owner of Planet Marketing, I decided that Affiliate Marketing was going to be one of the means through which I was going to monetize my website. I also run my own affiliate program. So, affiliate marketing is something that I can swear by. So, which one should publishers choose? The answer should be clear based on the preceding discussion;

If you are a serious publisher, then you will go with affiliate marketing. A business that’s premised on the ability to increase membership at the expense of the actual product cannot hope to be sustainable. And the assumption here is that you are running a serious business.