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MLM Reviews and Opinions
Jun
23

Are you wondering what the difference is between affiliate marketing and network marketing? Great question!

Newbies frequently confuse “Internet Marketing”, “Affiliate Marketing”, and “Network Marketing”. The differences are profound, please don’t be confused by the similar sounding names.

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First thing, let’s define “Internet Marketing” and then throw it out of today’s discussion. Internet Marketing refers to techniques, tools and strategies designed to get more traffic to a website or other product offer. Internet Marketing is the tool you use to promote your online business, doesn’t matter if that business is affiliate marketing based or network marketing.

You are an “Internet Marketer” if you try to make money online (in a legitimate manner). Period.

Ok, let’s throw that one out of our discussion today and move on to the topic at hand.

Affiliate Marketing

Wikipedia defines Affiliate Marketing as “a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts“.  In other words, you do work, send traffic to someone else, and they pay you what is usually a flat, one time commission. For example, Amazon has an affiliate program where you send people to their website and earn anywhere from 4% to 15%. You could set up a book review website, talk about new books, and then use special tracking links to amazon and get credit and earn revenue from each sale you generate. Pretty straightforward.

Pros of Affiliate Marketing

These are almost always free to join. Sometimes, they can be rather lucrative. Also, since these are usually small one-time sales, you don’t usually worry about calling prospects or really working the business like you would in network marketing. Since there are no real expectations from the merchant, you can work the business as much or little as you like.

Cons of Affiliate Marketing

If you stop selling, you stop earning. This creates a hamster wheel effect where you have to work faster and harder in order to earn more income. There’s no long-term residual income, generally speaking.

What is Network Marketing?

MLM Diagram

In Network Marketing (also called multi-level marketing or MLM), you earn commissions on products you sell, and then also earn a share of the sales generated by people below you in your downline. Wikipedia words it this way: “the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation.” In other words, you can earn a profit off of the efforts of others.

Let’s give a real world example. Let’s assume you enroll 5 people, who enroll 2 people each. You now have 5 people on your front line (level one) and ten people on level 2. This gives you a total organization of 15 people, even though you only personally enrolled 5. The benefit here is that your organization could potentially reach “critical mass”, where it continues to grow and duplicate, even if you don’t do anything!

Pros of Network Marketing

Network Marketing has the potential to earn enormous sums of money. Some high performing reps will earn over $50,000 per MONTH. As stated earlier, you also can begin to earn income off of the efforts of others, unlike AFFILIATE marketing where you never earn past your own personal sales.

Cons of Network Marketing

In general, it’s important to realize that this is much harder work than affiliate marketing. If you’re going to build a thriving organization, you must become the leader in that organization. You can’t just enroll two reps and hope for the best. It simply doesn’t work that way. There are also enrollment and monthly fees involved in maintaining your personal product volume. Don’t join a company if you don’t believe in the products.

Conclusion

If you’re not a “people person”, and don’t want to create a long-term residual income, Affiliate Marketing is for you. If you are dedicated to improving your own personal skills and growing a large team of independent business owners, network marketing could be your ticket to a full-time work at home income.

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Comments (1)

  1. Robert Worstell Says:

    August 22nd, 2012 at 1:10 am

    This is a great conversation starter. And one that needs to be had.
    When you cross effective SEO with affiliate marketing, many of your posts will rise to the top of Google and stay there, depending only on regular (once a month) adding related content which links to that top post. (And there are additional techniques with social signals.)
    Once you get a downlines, network marketing can be that “on automatic” scene as well. But it will still take quite some work to achieve this.
    A split between these is 2-tier affiliates, and recurring commissions. In both case, you do create passive income which can mount up.
    Right now, the best of both worlds is the “funded proposal” you link above.

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