Difference Between Affiliate Marketing and Multi-Level Marketing

One mistake that most of the people who are new to the industry make is to believe that affiliate marketing is just another term for MLM. MLM is yet another business model that rose to prominence due to the changes in the legislation regulating businesses that employ multi level systems. For those who actually understand what affiliate marketing is, the difference is very, very clear. Affiliate marketing is not another “get rich” scheme like most of MLM businesses. We pit the two marketing models against each other to see which one is good for your business.

What is Affiliate Marketing?

Affiliate Marketing is a passive marketing technique in which you promote someone else’s product or services using an affiliate network and for every purchase made as a result of your direct marketing efforts, you earn a commission. As an affiliate marketer, you promote and market products and services offered on the Internet to others. You do not develop the product, ship the product, or handle payments; you simply refer the products and when a sale is made through your marketing, you get paid. Affiliate marketing is one of the dynamic ways to make money on the Web, giving everybody equal opportunity to make money however they want. There are various ways to integrate affiliate links into your online content, such as integrating a banner ad, linking an image of a product on your blog to the merchant’s website where users can buy that product, and so on.

What is Multi-Level Marketing (MLM)?

MLM, short for Multi-Level Marketing, is one of the fastest growing marketing strategies of the global business world. MLM, also known as pyramid selling or referral marketing, is a hierarchical distribution model that involves selling of goods or services through a network of distributors. Many companies use this distribution strategy to get their products and services to consumers. However, instead of selling directly to consumers, they hire sales representatives to distribute their merchandise. So, you basically have a ton of people or you can say, participants trying to sell the same product and they make money by making a sale. This is why it’s also called network marketing. As an entrepreneur, you have to play different roles in the MLM business, such as promoter, marketer, public relations, sponsor, and so forth. MLM offers unlimited opportunities for those with the right product and the right selling techniques.

Difference between Affiliate Marketing and MLM

Definition

 – Affiliate Marketing is a process of getting paid by promoting a product or service that is not owned or manufactured by you. The owner can be person, a company or an organization, or a sole entrepreneur. For every purchase made as a result of your direct marketing efforts, you earn a commission. MLM, also known as pyramid selling or referral marketing, is a hierarchical distribution model that involves selling of goods or services through a network of distributors.

Model 

– Affiliate marketing is a form of digital marketing wherein you promote and market products and services you do not own or produce through affiliate marketing or referral marketing. It is a performance-based marketing system where you (as an affiliate marketer) only get paid if a sale is made or a specific action is taken. MLM, on the other hand, is a relationship based business model that involves individuals working outside the organization who essentially act as agents in facilitating the distribution of the firm’s offerings.

Goal 

– The primary goal of multi level marketing schemes is to generate revenue from distribution of products and services through pyramid of resellers and distributors who get paid a commission from their recruits’ sales. Distributors also get money through direct sales to consumers. The main idea behind affiliate marketing is to create a healthy and long-term partnership between the merchant and the affiliate, as well as to work collaboratively toward the achievement of common business goals, such as generating leads, creating sales, and so on.

Channel

 – There are many methods to promote your website and affiliate links, including pay-per-click advertising, organic search, social bookmarking, social media influencer, classified advertising, magazine and newspaper advertising, blogging, email lists, and so forth. MLM, on the other hand, is a networking based or relationship based marketing system that is part industry-driven and part creative thinking. MLM companies use their recruits to promote their offerings and those recruits use their recruits for the same. Most of the MLM business comes from word of mouth referrals to friends, family, colleagues, and so on.

Affiliate Marketing vs. MLM: Comparison Chart

Summary of Affiliate Marketing vs. MLM

The basic approach of both affiliate and multi level marketing is based on the use of an interconnected system of firms or individuals who work outside the organization. However, the outside work force involved in the MLM schemes is not in any way interlocked in affiliate marketing programs. Both are fantastic ways to make money on the Web, but with affiliate marketing, the possibilities for making money are virtually endless. Besides, affiliate marketing is one of the most popular and cost-effective customer acquisition tools available out there.

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