Affiliate marketing is one of the best ways to make money online. Beginners can easily earn $1K+ per month from affiliate marketing. However, it isn’t the only way to make money online. There are other ways too such as network marketing. What is network marketing and what is the difference between network marketing and affiliate marketing?
Importantly, what’s a better business model?
Let’s find out everything about the two amazing ways to earn money and see how they compare with each other.
What is Network Marketing?
Network marketing, also known as multi-level marketing, is a person-to-person marketing done by individuals either by direct sales or word of mouth. It is focused on generating a network of people who generate sales for you.
Here is how it works:
There are levels in network marketing. You sell products and earn a commission. Those people generate more sales and they earn commissions. When people under you generate sales, you earn for their efforts too. And this continues.
So, you don’t just earn a commission for your sales but sales generated by people under you. And this often gets complicated and complex when there are several tiers and everyone earns a certain commission for sales generated by people under them.
A typical MLM model looks like this:
There isn’t anything wrong with network marketing as long as you get paid for generating sales. However, it gets problematic when you are paid for recruiting people.
What is Affiliate Marketing?
Affiliate marketing is defined as earning commission for sales by promoting and selling other people’s products. There is no network here. You only get paid for sales you generate. There is no downline.
Here is how affiliate marketing works:
So, you choose a seller, select affiliate products, promote them online, generate sales, and take your commission.
You can earn two types of commission from affiliate sales:
- A one-time commission that is a percentage of a sale price. For example, 50% of the sale price
- Recurring commission where customers subscribe to a service or product and pay monthly such as a hosting plan.
What is the Difference Between Network Marketing and Affiliate Marketing
There are several differences between network and affiliate marketing. The key differences between the two models are covered below:
One of the key differences between the two types of marketing is the initial investment.
Network marketing requires an initial investment. You have to buy the product to join the network. Most of the time, you have a single product that everyone in the network has to buy to become part of the network.
You can’t enter the network and start making money without buying the product.
Affiliate marketing has no such requirement. You don’t have to buy any affiliate product. You can register with an affiliate network free of cost such as ClickBank. Pick products, get your affiliate link, and start promoting.
The whole process is free of cost.
Network marketing isn’t flexible as you have limited products to sell and the competition is fierce. If you are working with a large company like Herbalife or Amway, you’ll have several products in the same niche to promote.
And if the company asks you to purchase products first before you can sell them, it gets too tough.
However, not all companies have several product lines like Amway. Most of the companies usually deal in a few products or a single product. This limits your scope significantly.
You can’t change products. You’ll stuck with the same products. And you’ll have to promote them. It gets challenging after a certain point (due to market saturation).
Affiliate marketing is flexible. You can sell a whole lot of products. There are no restrictions from the merchant whatsoever.
For example, if you are an Amazon affiliate, you can sell pretty much everything from the Amazon store and get your commission. That’s hundreds and hundreds of products to choose from across thousands of categories.
You don’t get such flexibility from network marketing.
3. Person-to-Person vs. Performance-Based
Both network marketing and affiliate marketing have different business models.
Network marketing is person-to-person selling. Forget about large companies like Amway where you start a proper business. A typical network marketing company requires you to involve in face-to-face selling.
Because you aren’t selling a product, rather you are promoting a business model. And this type of selling is very hard online.
Affiliate marketing is purely performance-based online marketing. For example, if you are promoting a book from Amazon, you can simply share your affiliate link on your social networking accounts.
You don’t have to see and meet people in person. It is a straightforward process.
4. Control and Scalability
Since network marketing isn’t performance-based, you don’t have control over your earnings. In fact, your earnings depend on how others perform.
Your earnings depend on the people you have recruited. And if one of them stops working, you won’t be making much money.
And even if you continue working with your downline, the earning potential is limited. You can’t scale your business. Those who are towards the top of the network make the most money, all others lose money:
In the case of affiliate marketing, you have full control over your business. Your earnings are linked to your efforts. If you want to increase your commission, generate more sales.
Similarly, affiliate marketing is a complete business model that is fully scalable. You can switch products and merchants whenever you like. And sales are linked to your marketing efforts. Should you want to scale your business, you can easily do so whenever you like.
What’s the Right Marketing Type for You?
Both network and affiliate marketing have their ups and downs.
If you are interested in network marketing, make sure you stick with a reliable company such as Avon or Amway. Low-end network marketing companies that promise to make you rich quickly are mostly scams. Avoid them.
But if you are looking for a long-term scalable business opportunity, you must go with affiliate marketing.
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