Individuals who often use MLM programs claim that it’s one of the best ways of earning money online. However, most of these people either started when there’s less competition or are extremely gifted at selling ideas. Unfortunately, for beginners, MLM is a difficult strategy to use unless you’re lucky. Meanwhile, if you’re aware of MLM, or multi-level marketing, then you’ve probably heard of affiliate marketing. For this article, let’s compare affiliate marketing vs MLM.
Affiliate Marketing
The majority claim affiliate marketing as a more realistic method compared to MLM. It’s less challenging as it offers more rewarding experiences. Affiliate marketing is a tried and tested method for making money online. As an affiliate, you’ll promote a product or service from a 3rd party. It’s a method where you’ll earn as a consumer purchase using the link you’ve provided.
The Three Parties Involved in Affiliate Marketing
- The Brand
- Affiliate
- Customer
Affiliate Marketing: Process
- First, place an affiliate link to a website, social media, or email.
- Consistently promote the product.
- Affiliates can take advantage of ads to unlock a wider set of audiences.
- Finally, earn a commission for every purchase made through the affiliate link generated especially for you by the brand.
Affiliate Marketing: Sample
If you want to target a niche involving power tools, you can search for relevant affiliate programs online. As for which platform works best for affiliate marketing, this totally depends on whether you’ll choose your own website, social media, or email.
You know what? It’s best if you invest time and promote through each platform, and as you move forward, you’ll discover what approach works best for you.
Here are brands that offer power tools affiliate programs:
Affiliate Marketing: Pros and Cons
As a newbie in the world of affiliate marketing, trial and error are inevitable as you familiarize yourself with this money-making method. At this point, it’s perfectly fine if you’re still trying to wrap your head around being an affiliate. Don’t worry. Most successful affiliate marketers today experienced that too. Most of the time, you just need to push through the hardships with determination.
In this section, let’s discuss the pros and cons of affiliate marketing.
Affiliate Marketing: Pros
No Need For Huge Investment
You don’t need a huge investment if you want to try your luck with affiliate marketing. However, if you want to boost your posts on social media to give your affiliate link a chance to shine, you might want to bring out your wallet. On the other hand, although I say that you don’t need a huge investment in terms of money, you’ll need to invest a huge amount of your time in planning your strategy.
If you’re interested in being an affiliate, it’s important to start with market research. By doing this, it will help you choose a more specific niche that has low competition. Try using Google Trends or other keyword software.
If you want to create your own niche-specific blog, be prepared for additional costs as you buy your own domain. Meanwhile, if you’re not ready to buy a domain, you can start using a free plan.
Easy to Start and Launch
As an affiliate, you don’t have to stress order fulfillment, stock issues, or delivery issues. Your main concern should be the niche you want to focus on and the platform you’ll actively promote. After that, it’s time to search the internet for affiliate programs relevant to your niche.
No Need For Customer Support
As an affiliate, you’re exempted from the customer service provider role. Being a marketer is your main role as the consumers don’t buy directly from you. Think of yourself as a bridge that will link your audience to the actual brand. So, as your audience clicks the link you provide, they don’t expect you to provide customer support.
Although you’re exempted from acting as customer support, you’ll need to have an active role as you promote the products. The responsibility of marketing strategy, consistent social media or blog posts, and other relevant workload lie on your shoulder.
Great Passive Income
Alright, I’ll admit calling affiliate marketing as a passive income sounds like a stretch. However, we can consider it as a passive income once you posted your promotions. The great thing about the internet is that if you’re working in this field, it lasts forever. Well, unless another party takes down your post. But as long as internet users stumble upon your post and lead to a successful conversion, you’ll keep earning your commission.
Affiliate Marketing: Cons
Fixed Percentage For Commissions
The downside for affiliate marketing is the fixed percentage rate set by brands. Depending on the affiliate program you’ll apply for, there will always be a set percentage for every commission generated. In fact, affiliates admit that sometimes the amount of money spent on ads is more than the commissions earned.
The only solution is to increase your chances for a higher conversions rate by executing a better strategy to promote products. However, some brand affiliate programs may motivate you as they offer various bonuses and perks once you reach a particular milestone with them.
Payment Issues
It’s important to be aware of payment thresholds before you can access your earnings. It means that it will take a long time, depending on your conversion rate, before you can cash out your earnings for the month. This payment system is often discouraging especially whenever you encounter a $1 or $2 setback. Aside from the payment threshold, some payments are delayed due to backlog or issues involving the merchant.
Affiliate Links Can Be Removed
Some internet users see affiliate links as spam or scam that takes the consumer’s money. These people see affiliates as someone who cheats them for extra money. However, that’s not true. As an affiliate, you need to establish a trustworthy online presence to avoid misconceptions of consumers.
MLM=Multi-level Marketing and Networking
Multi-Level marketing is often abbreviated to MLM, also refers to Network Marketing. However, most people label it as “Pyramid Schemes.” MLM usually involves direct sales companies who distribute a service or product by making use of person-to-person sales as part of their strategy. It often involves a commission-based workforce that is encouraged to create their own sales team.
If you apply to such programs, it’s up to you to sell the product or services. It can be:
- Directly to other people
- At your home
- At a stall
- Online
Typically, such companies encourage existing distributors to recruit new distributors under them. In exchange, they’ll earn a certain percentage from the recruit’s sales. We call these recruits the distributor’s downline. Aside from the percentage received from the recruits, distributors can earn money through direct sales. This cycle repeats as the recruiters will also be encouraged to find recruits, hence the name “multi-level” marketing.
Although controversial, MLM is a legitimate business scheme. However, the main problem often pointed out regarding a pyramid scheme is how people from the top of the line enjoy receiving money from their downline. It means that people at the top enjoy huge commissions earned from the recruits.
Such schemes take advantage of people by pretending to be a legitimate multi-level business. You can spot a pyramid scheme if the business focuses more on recruiting rather than direct product sales.
Multi-Level Marketing Sample
Nowadays, there are a lot of businesses that use MLM strategy. It often involves industries in the following field:
- Nutrition
- Beauty
- Home
- Health
- Financial
- Utilities
- Travel
Here are the top MLM companies based on their annual revenue that you should know:
- Amway, $8.8B (USA)
- Avon, $5.7B (USA)
- Herbalife, $4.5B (USA)
- Vorwerk, $4.2B (Germany)
- Mary Kay, $3.5B (Germany)
- Infinitus, $3.41B (China)
- Perfect, $3.06B (China)
- Quanjian, $2.89B (China)
- Natura, $2.26B (Brazil)
- Tupperware, $2.21B (USA)
Multi Level Marketing: Pros and Cons
As for the last section of our affiliate marketing vs MLM article, let’s discuss the pros and cons of MLM.
Multi-Level Marketing: Pros
Share a Product You’re Passionate About
It’s great if the product you’re selling is part of your passion, especially if you have the first-hand experience of its benefits. As you work your way in social networking, it’s important to promote success stories about the product—what better way than showcase it yourself.
Most distributors make sure to have testimony stories or before and after pictures to help convince potential customers. So the more passionate you are about your product, it will sell more effectively.
Easy Way to Start a Business
Network marketing can be a great opportunity to help make ends meet. If you’re worried about your cut back hours or sudden unemployment, distributors testify that MLM is a great way to earn money. Whether you apply directly to an MLM company or have someone recruit you, network marketing is proven to be a low-risk investment.
You can also earn more money as you recruit and mentor people under you. So, in the end, you’ll have two sources of income:
- From your direct sales
- The percentage from your recruit’s sales
It’s best if you work with an MLM company with a proven track record and be sure to research before you proceed. Take note, make sure to choose a product or service that’s not available near your area yet.
Work Wherever You Want
Another perk of being a distributor is that you can choose wherever you want to work. It’s also up to you on how you plan to sell your product. So it’s fine whether you’re planning to build a stall or promote your products on social media. It also allows you to spend more time at home.
Mentorship
The idea of network marketing involves you being a brand representative. After you sign up for your preferred MLM brand, you’ll be assigned to a sponsor who will help you build your reputation as a distributor. So, as you increase your sales, your sponsor will benefit by earning a commission each time you sell a product or service.
Multi-Level Marketing: Cons
Most People Don’t Get Rich
The harsh reality when it comes to network marketing—it’s not a great income stream. Of course, this depends on increasing your sales and creating your own downline of recruits. But as you begin your MLM journey, your profits can be limited. Besides, before you become a representative, you’re required to pay the fee to access their brand and products.
Face-to-face
Did you know that less than 6% of MLM takes place on the internet? Most of the time, at least 80% of sales happen during a face-to-face meeting rather than the internet.
It Takes Time
It’s hard to start everything by yourself. In your journey as a distributor, it will take time before people trust you. As a solution for this, you should consider selling the products online. Although building an online presence also takes time, think of it as more audiences to reach out to.
High Rejection Rate
In the network marketing industry, you’ll encounter a lot of rejections. The average success rate of a newly hired recruit is 1%. Let’s say that out of 100 people who you approached for sale. You’ll get rejected 99 times.
Beware of Network Marketing Scams
As mentioned above, there are existing pyramid schemes where “sponsors” are only interested in hiring more recruits. Let’s admit it’s hard to tell whether the offer is real or not. To avoid scams, make sure that the company has a tangible product being sold. So if investments are requested with no real return except for information, then it’s time to raise a red flag.
Low-quality Mentorship
Mentorship can also have disadvantages, especially if your sponsor is not interested in helping with your growth. The worst scenario? You’ll end up fending for yourself alone.
Conclusion
At the end of this affiliate marketing vs MLM article, we’re aware of the pros and cons of each business scheme. If we consider the world’s condition, MLM may not be the best option at the moment. As mentioned above, MLM needs face-to-face recruitment if you want to create your own downline. However, it’s totally fine if you feel MLM suits you best.
If you want to learn about more ways to make money online, explore Realistic Pay.
