Affiliate Marketing vs MLM: What’s The Difference?

Thinking of earning some extra cash? Check out affiliate marketing – it’s an easy and effective way to do so. A lot of people get confused between affiliate marketing and MLM (multi-level marketing), but they are not the same thing. 

MLM requires you to recruit people into your network, while affiliate marketing programs are free to join and don’t come with any such obligation. 

In this article, we’ll go through both strategies, highlighting the key differences. And trust us, after reading this, you won’t mix up affiliate marketing and MLM again.

Affiliate Marketing vs MLM: What’s The Difference?

Thinking affiliate marketing and MLM are the same thing? Think again! Sure, both promise residual income and more free time for doing what you love, but the methods are different. 

MLM goes by many names like “network marketing,” but it’s sometimes inaccurately referred to as a “pyramid scheme.” So, let’s clear up the confusion between these two money-making methods.

What is Multi Level Marketing?

Multi-level marketing (MLM) is a business model where people, rather than retail outlets, sell products to customers. This shifts the responsibility for selling onto an independent distributor network.

In this model, distributors aren’t employees of the company, but rather individual business owners who recruit their own networks to help them sell. These extended networks of independent distributors help generate revenue for the MLM company.

Imagine a pyramid to understand how MLM works. For example, Jessica is the first independent distributor hired by Direct Marketing Company and becomes the top of the pyramid. Jessica recruits five more distributors who each recruit five more, and so on. This builds out the pyramid that Direct Marketing Company relies on to sell its products.

The sponsor or upline of everyone recruited is referred to as Alice. The people she recruits and all the people they recruit become her downline.

The dynamic of MLM companies may lead to confusion with pyramid schemes, which also have a pyramid-shaped structure. However, the difference between a legitimate MLM and an illegal pyramid scheme lies in the sales vs recruitment focus in the compensation plan.

According to the Federal Trade Commission (FTC), a legitimate MLM will pay based on sales to retail customers without requiring recruitment of new distributors. Meanwhile, pyramid schemes depend on continuous recruitment of members who pay dues, even if they have to keep buying products they may not be able to sell.

What is Affiliate Marketing?

Affiliate marketing is a legit way to make money online, but it’s often misunderstood. Unlike MLM, it’s a commission-based strategy where participants promote products of their choice and earn a commission on each sale. Retailers or businesses pay the affiliates for driving traffic, sales, or referrals.

Contrary to popular belief, you don’t need to recruit people to join a network to succeed in affiliate marketing. In fact, some affiliate marketers are earning enough to quit their day jobs by promoting products through their channels, groups, and websites.

The process is simple: after joining a brand’s affiliate program, you’ll get a unique link to share with potential customers. Whenever someone buys a product or fills out a lead form after clicking on your link, you’ll earn a commission. It’s a win-win situation for both the brand and the affiliate marketer. The brand gets more sales and reaches new audiences, while the affiliate earns a cut of the action.

So, don’t listen to the rumors. Affiliate marketing is a legitimate way to make money online. You can learn everything you need to know about it on the best learning platform Wealthy Affiliate.

5 Advantages Of Affiliate Marketing vs MLM

We already talked about the difference between affiliate marketing and multilevel marketing.

In case you read all that and still like MLM, here are five reasons why affiliate marketing is better:

1. Promote the products you want

The biggest advantage of affiliate marketing is that you have complete control over the products you promote. With MLM, you have to promote the specified products and do network recruitment, which might not always be of your interest. 

On the other hand, with affiliate marketing, you choose the affiliate programs you sign up for and the products or services you promote through your own website or other channels. This way, you can sell based on your skills and interests.

2. You don’t have to close the deal yourself

Another advantage of affiliate marketing is that you don’t have to close the deal yourself. With affiliate marketing, it’s not a sales job, instead, it’s about offering genuine expertise on a given niche and carrying out high-quality product reviews. You can turn your hobby into a business by making money every time someone buys the products you recommend.

3. You’re in charge of marketing 

MLM programs are very prescriptive, which requires a lot of personal interaction and direct communication. With affiliate marketing, not only do you get to choose the products and services you promote, but you also get to control how you promote them. 

You can do it all from the comfort of your own home, using various methods such as a website, YouTube, Facebook, Instagram, Tiktok, and email marketing lists.

4. Most affiliate programs are free to join

Starting up with MLM can be a big investment, with a substantial fee for the “startup kit” which includes all the products you’re meant to sell. This can be difficult to offset and there might even be ongoing membership fees. On the other hand, most affiliate programs are completely free to join. Brands want you to be a part of their affiliate marketing program, so why would they charge you for the privilege?

5. Affiliate marketing pays off fast

MLM programs are a slow burn and it can take a long time before you start seeing any sort of return. With all those “setup fees,” don’t expect to start turning a profit any time soon, if ever. On the other hand, once you’ve been accepted to an affiliate program, you can start promoting the brand’s products and earning commission straight away. 

The majority of affiliate programs have some sort of minimum payment threshold to hit before you can withdraw your earnings, but these are rarely more than $50 to $100. And even if you don’t reach that threshold within a month, it’ll roll over to the next.

Is Affiliate Marketing Better Than MLM?

If you’re trying to choose between affiliate marketing and a multi-level marketing scheme, the answer is pretty clear: affiliate marketing is the way to go. Here’s why.

First off, let’s be real: MLMs are notorious for not being very profitable for the average person. The people who really make any money are the ones at the very top of the pyramid. But with affiliate marketing, everyone can win.

Merchants get to reach more people and make more sales, while affiliate marketers get to earn a commission without having to deal with the hassle of logistics and customer support. So, you get to focus on what you’re good at (promoting products and earning money) without the added stress.

In short, affiliate marketing is a win-win for everyone involved. So, why bother with MLMs when you can have it all with affiliate marketing?

Final Thoughts

Affiliate marketing is a legit way to earn money through the internet. You can promote products and earn a commission on every sale made through your unique affiliate link.

On the other hand, MLM isn’t really worth your time. It’s structured like a pyramid scheme and only benefits those at the top. So, save yourself the trouble and skip this one.

We know what you’re thinking, “These guys are just affiliate marketers themselves, they’re biased.” You’re right, but hey, we’ve been in the game for a while and know a thing or two about how it works.

For more guidance, sign up for my online business coaching.