Is affiliate marketing an MLM?

Dropshipping | Affiliate Marketing | Multi-Level Marketing

I believe these are the 3 common keywords that would appear on Google when you try to search for a way to make money online.

Is Affiliate Marketing an MLM?

Let’s leave “dropshipping” aside, today we’ll be discussing affiliate marketing and MLM only, because their advertising models are quite similar, yet they’re not the same. That’s why a lot of newbies will get confused when they first started out in the online business world.

Based on my past experiences in these three advertising models, I’d also give you my personal opinion on why I’d choose affiliate marketing and dropshipping instead of MLM at the very end of this article,

But before that, let’s get started with the basic knowledge first.

Table of Contents

What is MLM?

Multi-level Marketing (MLM) is also known as Network Marketing.

Literally, the words “Multi-Level” and “Network” have done a perfect job in describing to you precisely what this advertising model is about.

With MLM, you’re allowed to earn multi-levels of commissions by recruiting people to sign up for the program you’re promoting. 

The people who recruited by you are called your “downlines,” and the more people you and your downlines recruitthe more money you’ll be making.

Check out the short video below to have a better understanding of how MLM works.

Pros of MLM

You can work remotely: Your schedule will be very flexible if you’re very successful in the MLM industry. In the beginning, your schedule might be full of meetings and appointments to recruit more people.

It’s possible to make a massive amount of passive income: If your downlines are loyal, they could bring you a lot of income.

It’s a great way to train your mentality: In the beginning, you’ll get rejected many times by people who refuse to join the program. It’s a nice experience for you to learn to keep trying and never give up.

Cons of MLM

Your friends and relatives might stay away from you: Let’s face it; nobody likes to be sold. Nobody likes a salesperson who always asks them to buy something or join their program.

A woman refused to accept the deal from a salesperson

It’s hard for you to succeed if you’re at the bottom of the network: The earlier you get started with an MLM program, the faster you can make tons of money as the competition is always low at the beginning.

In most cases, you’ll need to pay a pricy introductory fee to join an MLM program: The fee will distribute to the uplines and company. That’s one of the tactics used by most MLM companies to keep them alive.

MLM is ONLY for people who love to socialize: If you’re an introvert and shy person who’s not comfortable in meeting new people and make new friends, then MLM is not for you.

It’s hard to find a reliable and trustworthy MLM program: Most of the MLM programs nowadays are borderline illegal. They’re considered as Pyramid Scheme instead of the MLM program.

MLM is not a Ponzi Scheme, a.k.a Pyramid Scheme

Although the advertising model of MLM and the Ponzi Scheme is similar, the Ponzi Scheme is illegal.

The best way to differentiate the MLM and Ponzi Scheme is:-

MLM does provide their member with a real and legit product/service to sell and allow them to recruit new members at the same time. But Ponzi Scheme doesn’t have such a proper system.

The only way for someone to make money in the Ponzi Scheme is by recruiting more new members.

Hence, the Ponzi Scheme is scamming people’s hard-earned money.

What is Affiliate Marketing?

Affiliate Marketing is an advertising model that allows you (the Affiliate) to partner up with a merchant, and then earn commission through promoting their products.

Now, you might be questioning:

“Huh? Why it sounds like an MLM too.”

The process of Affiliate Marketing is entirely different. You can see the figure below to gain a better understanding of how affiliate marketing works.

How affiliate marketing works

You got a website that’s up and running. You create content that reviews about the product that you like and publishes it on your website.

If your audience reads your article and likes the product, they’ll click on your affiliate link that brings them to the merchant site. It can be Amazon, Etsy, eBay, or any other merchant you decide to partner with, as long as they’ve affiliate program.

If they purchase the product, then you’ll be earning commission from the sales you make.

Pros of Affiliate Marketing

Freedom of choice: In Affiliate Marketing, you’ve got the freedom to choose your favorite niche and promote any products you like (must be related to your niche) to your audience.

You fully control your income: In MLM, your income is entirely reliant on your downlines. If they don’t sell, you don’t earn.

However, if you want to build a sustainable business that you’ve 100% control over your income and takes the same amount of time to be successful, affiliate marketing is a far better option.

Sunny day

Low start-up cost: As I mentioned earlier, you’ll need to pay a pricy introductory fee to join an MLM program in most cases. So that you’re able to be their associates.

But in Affiliate Marketing, it takes little to no start-up cost to build a stunning website. And you can join any affiliate program and start making money for free!

If you’re not internet savvy, who doesn’t have prior experience in coding like me. Wealthy Affiliate is a great place to build a website that can be done in a couple of minutes.

However, you might need to invest some money in purchasing essential things like website domain and other researching tools if you’re serious and ready to crush it in your business.

But guess what? A domain name might only cost you around $15 per year. And you can find awesome researching tools and web host for free at Wealthy Affiliate, too.

Caveat

Please be aware of any affiliate program that requires you to pay an introductory/registration fee to join their program. Those are not affiliate marketing but probably a scam.

Cons of Affiliate Marketing

It takes time to build a high-authority website which drives massive free traffic: Good things take time. To build a successful website, it’ll eats up a lot of your time and effort. In the beginning, you’ll need to create tons of valuable content to serve your audience. This would bring up to the next disadvantage of Affiliate Marketing.

You’ve to be willing to work FOR FREE: You’ve to understand that if you choose to do Affiliate Marketing for a living, you can’t expect a high return at the very beginning. I think this applied to every business, including MLM.

Hence, you’ll need to work for free, continue to put out great content to serve your audience when you first start out in Affiliate Marketing.

It might seem like you’re not making any progress in the beginning, but you’re actually building the foundation of your business. And once your business starts to gain traction, the growth of your business will completely blow your mind. 

That’s the power of The Compounding Effect. Then, you can just sit back and watch the commissions rolling in.

The power of The Compounding Effect

5 Biggest Differences Between Affiliate Marketing and MLM

After understanding the basic knowledge of MLM and Affiliate Marketing, and their pros and cons, I think it’s easier to know what’re the differences between these 2 advertising model.

However, I will help you to gain a more precise idea by categorizing their differences in table form.

AspectsAffiliate MarketingMLM
The Upline and Downline RelationshipThere's no multi-level upline and downline relationship in affiliate marketing.

It's just between you and the merchant, which you're partnering with.
Yes. there's multi-level upline and downline relationship in MLM.
Freedom of choiceIn Affiliate Marketing, you've got the freedom to choose your favorite niche and promote any products you like.With MLM, you're only allowed to promote their own products/services. As there're very few legit MLM companies out there, so you might have a minimal selection to choose from, which means you might not be able to get into your favourite niche.
The way you get paidThe payout structure of Affiliate Marketing is very straight forward.

If you make sales, you'll get paid commission, and the percentage of the commission depends on each affiliate program you join.
There're various compensation plans used by MLM companies to payout their MLMers, such as 'Stairstep Breakaway Plan', 'Unilevel Plan', and 'Matrix Plan'.
DependencyYou've 100% control over your income and business.In MLM, your income is fully reliant on your downlines. If they don’t sell, you don’t earn.
Start-up costIn Affiliate Marketing, it takes little to no start-up cost to build a stunning website.You'll need to pay a pricy introductory fee to join an MLM program in most cases.

Final Thoughts: Why I'd rather choose affiliate marketing than MLM?

As I’ve told you earlier, I’ve experiences in both the advertising model. The reason why I choose affiliate marketing and don’t even spend time thinking of MLM is that I was scammed by an irresponsible scammer in an MLM program before.

I can call them a Ponzi Scheme, which is illegal, and they only require people to make money by recruiting more people.

I’m not saying that you can’t make tons of money from MLM. But from what I’ve noticed, 99% of MLM company that claims they’re legitimate out there is Ponzi Scheme.

Even though you’re lucky enough to be an associate of a legit MLM company, but guess what? In most cases, you’ve placed at the bottom of their networking marketing, which means you’ll need to work twice (or even more ) harder to achieve success compared to those who’re already on the network earlier than you.

An illustration of Multi-Level Marketing or Network Marketing

I know I’m biased, but this is an UNDENIABLE FACT.

Therefore, if you’re anything like me, who’s an introvert and hate face-to-face selling, but you want to earn money from promoting products and services that you like. Then affiliate marketing is a more fulfilling route to financial gains.

That’s also the reason why I think affiliate marketing is better than MLM. With affiliate marketing, you can be your own boss who has the 100% control on your income, and you’re able to help people find products/services that you actually care about at the same time.

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Zac Phua

Zac Phua

Phua is a young aspiring internet entrepreneur who started his online business at the age of 20. The reason he launched lifegoalfinisher.com is to help more people to achieve success in online businesses and reach their financial goals.

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10 thoughts on “Is Affiliate Marketing An MLM? An Honest Answer From A Ponzi Scheme’s Victim.”

  1. Hi There,

    I think MLM is more common these days with other names to mask the actual reason for the scheme. I was almost involved with on that are called CEO Movement, previously know as Project x and they sold a downline of the Kangen Ironizes from Japan but I just thought the £7000 to start your own downline was to much. I’ve read through your website and like the way you have explained MLM.

    Steve 

    1. Hi, Steve. I appreciate your comment, and it’s my pleasure to hear that my content does serve you well.

      Indeed, almost every beginner who wants to make money online, the first method that comes to them is often related to MLM.

      I’m so glad to know that you’re not involved in any MLM program eventually, and find another way around is good for you.

  2. What does early start in MLM have to do with success, at every point that you start you don’t have people in the structure… I can give you a lot of companies that don’t have a high joining price and are legit…
    Affiliate Marketing for sure isn’t MLM, it’s just two different things, and the names are different, which makes it even more obvious. But if you do both, for sure you can use your affiliate marketing experience to build your MLM business more.

    1. Hi, Victor. I agreed when you trying to say that every point where we start in MLM can’t determine how successful we’ll be in the end.

      This is because I understand that it really based on our mindset, and I do believe this applied to every business. If you work hard, you’ll have the chance to achieve success.

      What I’m trying to deliver the message to the audience I want to let them know the pros and cons of both advertising models, and why I think affiliate marketing is a better choice for them.

      Personally, I think building a business based on MLM basis is not as stable as affiliate marketing. And it’s really hard to find a legit MLM company, especially for newbies who don’t have many experiences.

      However, I appreciate you for taking your precious time to read my article and leave such an honest comment for it. Tell me about what you think about my reply, maybe we can discuss more, and it’ll be a cool experience if we could share more knowledge and help each other grow.

  3. For me, affiliate marketing is the best online business one could start with little  cost attached, i no this because i have been in this for some months now and i must tell you i have made a fairly good amount of money from it…although a lot of people don’t really believe it yet I tell affiliate marketing is the best

    1. I agreed with you, David. Indeed, affiliate marketing is a better choice for beginners who want to make money online, if compared to MLM.

  4. Great article. It provides detailed information that helps to differentiate between Affiliate marketing and MLM. I have been an affiliate for about a year now, in my experience I agree with you that affiliate marketing has very low start up costs which is a huge advantage compared to other activities. Thank you

    Baraka

    1. Thanks for taking the time to read my article and leave your honest comment on it, Baraka. Indeed, affiliate marketing is more beginner-friendly compared to MLM and other activities.

  5. There are distinct differences between affiliate matting and multilevel marketing and I can only imagine what it entails to invest in multi level marketing especially with the dangers if not making any money at all from it. Affiliate marketing on the other side is a very lucrative offer that if done rightly, would help to bolster one’s chance of living the American dream. This is really great post

    1. I agreed with what you say, Rodarrick. Thanks for taking the time to read my article and leave your comment on it. I appreciate that.

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