Network marketing vs. affiliate marketing? You’re probably wondering what sets each one apart from the other.
Although the business models are different, both are great opportunities to earn money whether you do it on a full-time or part-time basis. While you can work from home or anywhere you like, both will require you to build relationships with people and demonstrate your commitment.
Read on and let’s find out which one works best for you.
What is network marketing?
According to Wikipedia, network marketing or also known as multi-level marketing (MLM) is a marketing strategy where you promote products and services of a multi-level marketing company and in turn, you will be compensated through a pyramid-shaped or binary compensation commission system.
This is mainly a hierarchy system. When you join any network marketing company you’ll be under someone and those you’ve recruited will be under you. You earn varying levels of commission from the people you recruit or your “downlines”.
If you think you’re earning loads from your team, you’re also making those on the upper level earn even more.
Check out this list of multi-level marketing companies and see how many are familiar to you.
There is a need to constantly connect to people that could be your potential prospects where you can start with your warm market which includes your family and friends.
There are two streams of earning revenues within this type of business model:
- Directly selling products and services to your target customers
- Recruiting people to join your team, when they successfully make a purchase
Personally, I’ve tried joining a handful of multi-level marketing companies because of their products. Mind you, their products can be very expensive. And then I tried the business opportunity, but it didn’t really work for me. I also didn’t like the fact that my friends and family ignored me.
Please be aware that there are a few pyramid schemes disguised as a multi-level marketing company. A pyramid scheme is sketchy as it focuses on recruiting people instead of selling products or services. As most members are not able to profit from it, it becomes unsustainable and illegal.
What is affiliate marketing?
With affiliate marketing, you promote other’s products and services, and you get a commission when people purchase based on your recommendation. Then the affiliate program or network pays you for the sale.
Let’s say you’re an avid gamer, you can actually start a video game website. You can talk about video game reviews, video game consoles, controllers or memory upgrades. You can even have strategy guides for various games.
It could also be another niche like weight loss. You can share your weight loss journey, review supplements or exercise equipment, share diet plans and recipes, and even share workouts. There’s so many possibilities!
I love the fact that affiliate marketing gives you the chance to do what you love while helping others solve problems. The recommendations that you provide matter a lot. You should be able to build trust with your target audience.
If you look at Google Trends, there is an increasing interest for affiliate marketing. There is an impressive increase in the search for the term “affiliate marketing”.
What are the pros and cons of network marketing vs. affiliate marketing?
To get a better view of network marketing and affiliate marketing, let’s discuss the pros and cons so you can better understand their differences.
Pros: Network marketing
You can earn residual income. You can get paid long into the future for one sale with an autoship option. This can be similar to royalties.
This business model could be great for you if you have exceptional skills in direct selling and recruiting. Once you have worked your way to a higher level, you definitely earn more.
You may be eligible for additional rewards. If you were able to hit a certain sales volume, you might qualify for a car or a vacation package. It varies with each multi-level marketing company.
You can contribute to a better cause. Most, if not all, multi-level companies have a partnership with a foundation. It may be helping women fight against domestic violence, providing better education for children, or even funding research for cancer.
Pros: Affiliate marketing
Its easy to start. Start by creating your website, and then sign up with affiliate programs or affiliate networks relevant to your niche. You can choose affiliate programs that are free to join.
You can earn passive income. This results from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it. This can be similar to investing in real estate or stocks.
You can join most affiliate programs or networks for free. All you need to do is sign up, get approved and you can start using your affiliate links.
You don’t need to purchase a starter kit to join or start earning unlike multi-level marketing companies.
It is cost-effective and you can start right away. Affiliate marketing can be very appealing since you can keep costs low, and get started quickly without hassle.
You can benefit from incentives. There are affiliate programs that offer incentives for top affiliates who are able to generate a certain amount of sales.
You don’t need to deal with customer support. After you link the customer to the merchant, you don’t need to deal with customer complaints since customers will contact merchants directly.
Cons: Network marketing
You need to purchase a starter kit before you can start earning. While this a great way for you to try the products and share it with others, they can also be quite expensive.
You need to get people to sign up and buy the products. The more you recruit, the more you earn. So if you’re not able to recruit people to join the business opportunity or generate sales, you won’t be able to earn.
There are people who have already been burned by unscrupulous companies and are hesitant to participate when they find out it’s a multi-level marketing company.
You may also need to do house parties, product demos or workshops, and provide samples to encourage people to buy. So if you’re not good at this, it may be difficult to succeed.
You can lose your membership or discount in network marketing companies if you’re not able to generate sales for a certain period. Which means that you have to keep on purchasing the products and/or recruiting others to join.
You may end up with an inventory of unsold products. Most multi-level marketing companies practices front loading. You may be obliged to purchase a number of products so that your status as a distributor remains active. If you can’t sell it, you have to purchase it yourself.
Finding reputable and legitimate multi-level marketing companies can be challenging. You have to check that they are manufacturing and selling actual products and services, not just recruiting people and selling promises. Otherwise, it may be a pyramid scheme.
Cons: Affiliate marketing
You need to do a lot of research. You need to choose a niche and understand your target audience so that you can provide value to them.
You need to learn how to create a website and produce consistent and engaging content. It can get overwhelming considering that you need to learn a lot of things when you start such a website creation, content writing, keyword research, search engine optimization, email marketing and engaging your audience through social media.
You need to generate traffic and promote your website. You need to understand how to increase traffic which is one of the biggest challenges affiliate marketers face.
It takes time and success will not happen overnight. The key is consistency and commitment. If you’re not willing to do the work, don’t expect that you can have the laptop lifestyle you’ve always dreamed of. Remember, it is not a get-rich-quick scheme otherwise, it would be a scam.
Which one is better: network marketing or affiliate marketing?
If you want to quit your job or start earning extra income, both network marketing and affiliate marketing are great options since they offer convenience and flexibility. You can work from home at your own time.
If you want to be successful in network marketing, you need to have exceptional skills in direct selling and recruiting. You need to be comfortable promoting their products (mostly face-to-face) and help the company grow by recruiting more people.
It also requires an upfront payment when you sign up to purchase products and start qualifying for commissions. Plus, you are limited to the products offered by the networking company you’re joining.
With affiliate marketing, you don’t need to be an expert to start and start up costs are low. Plus you’ll be surprised that you can create a website in a few minutes.
Then you can promote products that are relevant to your niche. You also have the freedom to join as many affiliate programs and networks as you like.
As it is very easy to start, you can even start your business for free.
Bringing it all together
Always go for something that will suit your needs and will benefit you in the long run. Don’t just put your money on anything and expect it to grow without investing time and effort.
Affiliate marketing is allows you to achieve passive income in the comfort of your home without worrying about creating your own products or services. As long as you address your target audience’s needs, gain their trust and provide value, you can convert them into active consumers and help you gain the success you desire.
Just stay consistent and persistent. No matter what business you’re in, there will be bad days and there will also be good days. Keep it positive.
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