Is Affiliate Marketing Like MLM: What’s the Difference?

If you’re looking into new ways to make money for a side hustle or business, both multi-level marketing opportunities (MLMs) and affiliate marketing are likely to appear on your radar. Most people have heard of MLMs by now, but affiliate marketing is a newer strategy made possible by the internet.

So, if you’re wondering, “Is affiliate marketing like MLM?”, we’re here to help you clarify the difference and decide the best route for your income-generating plans!

How MLM Works 

MLM – or Multi-Level Marketing – is a pyramid scheme where the people on top get a percentage of the sales revenue from the salespeople they recruit into the organization.

Well-known MLMs like Herbalife, doTERRA, Amway, and Mary Kay have made a lot of people nervous about the MLM business model. In an MLM, you have to buy the products yourself and then try to sell them at a profit, while also recruiting other salespeople yourself who will pay you a slice of what they earn by selling – and so on up the chain to the top.

That’s why so many people get a bad feeling about MLM, whether they’ve tried it, seen a friend go through the system, or just had someone surprise them at a social gathering with an MLM sales pitch.

People at the top recruit salespeople. They receive a cut of what the salespeople make. Those salespeople then recruit and receive a cut of what their recruits make. This is what makes it “multi-level.”

On the ground, MLM salespeople are also required to buy their stock and then try to sell at a markup to make a profit. But some of their profits are taken by their recruiter. In practice, this means that only people high in the pyramid will earn a significant amount of money, while those at the bottom regularly struggle to make ends meet.

With this pyramid scheme, claims of great earnings rely on exploiting those recruited further down the line.

Pros and Cons of MLM

MLM is still an actual business model and does provide the capacity to make money, or these organizations wouldn’t keep cropping up. Popular brands like Herbalife and Mary Kay thrive on vast networks of salespersons.

So, what are the pros and cons of MLMs or network marketing opportunities?

Pros

With quality products, it’s still possible to make a profit selling in an MLM organization, even low on the totem pole, but the biggest earners will always be those with multiple levels of recruits below them.

If you’re good at selling and recruiting – and have access to a rich source of demand (not just friends and family) – then you can probably make decent money from an MLM.

Cons

The major downside of MLMs is that you need a profitable network of family, friends, and acquaintances for it to work. First, you must buy products before you can turn around and sell them. Then, if you don’t recruit new salespeople under you, you’ll never get to the high-earning claims of the system, all while you still pay tribute to your recruiter.

What’s worse is if your source of demand runs dry, you can lose money on the products you already purchased with the intent to sell. Many people will sell to their friends and family, but without a steady source of buyers, their business model evaporates in a few months – and they end up earning less than their initial investment.

Many MLMs also require you to purchase a certain quota, which can compound losses if demand decreases. Those who feel they’ve invested in their position in the company will lose more money buying at quota, even if they can’t sell fast enough to make a profit.

In this way, MLMs often make money off low-tier salespersons, but it’s arguable whether these are legitimate sales.

How Affiliate Marketing Works

Affiliate marketing is a business model in which you promote a product and earn a commission on sales. The relationship is between a merchant (the brand or product owner) and the affiliate (the marketer promoting a product).

At its heart, affiliate marketing involves individuals drawing attention from their audience and converting them into new customers by sharing the product they’re promoting. Each sale brought in by the affiliate will earn them a commission.

In modern-day sales, affiliates are given special tracking links to put out there on social media, blogs, podcasts, paid ads, email, and other places online where their audience can see the product. As visitors click through that tracking link and go on to make a purchase, the affiliate is credited with the sale and pockets a commission (on ClickBank, this payout can be as high as 75% of the total purchase price!).

If you’re an affiliate, the more sales you direct through your links, the more you can get paid. The key to the affiliate marketing partnership is “marketing” – so as long as you can write articles, publish videos, run paid ads, or send emails, you can build your own business as an affiliate without creating (or even buying!) a product.

(See more about whether affiliates need to buy their products they promote.)

Pros and Cons of Affiliate Marketing

Affiliate marketing is the perfect way to turn your online reputation or marketing skills into a business model. If you can pique the interest of an online audience and inspire them to buy a product, you can earn an income as an affiliate marketer!

Pros

Affiliate marketers can have as many partnerships and products to promote as they want. Each affiliate relationship is a new opportunity to earn.

You can promote products you already own and love, promote practical products that people need, or buy a product once (with no obligation) and then share your experiences with it. You can earn promoting brands you trust and get to know new brands too.

Some affiliate partnerships offer very profitable commissions, and some brands provide easy-to-use marketing assets and instructions that simplify your job. Depending on your chosen partnerships, you can start earning almost immediately – as an example, if you have a blog that gets thousands of views per month, simply plugging in some affiliate tracking links into your content and a few banners could start getting the sales rolling in.

You also have full agency over how you promote your links, build your brand, and choose which products you promote. All of this is with zero initial investment, no need to pay a cut of your earnings to anyone, and no obligation to purchase the product you’re promoting. 

Sometimes, you can even get a free sample or trial to promote each product and brand. Every affiliate partnership is unique!

Cons

Affiliate marketers are solo agents. You have the freedom to build your brand how you see fit, but you’re ultimately responsible for your own success! Not every affiliate promotion will be profitable, and it’s up to you to adapt this successful affiliate marketing business model to your own business needs.

One of the most common limitations with affiliate marketing is that some brands want to define how you represent their product when you market it. They may request that specific language or images be used. Of course, on ClickBank, there’s usually a lot more latitude given to affiliates, and product owners will also often provide a set of affiliate tools and swipe files to make promoting their products quick and easy.

If you already have an online audience, network, and content creation skills, you’re more likely to thrive – conversely, it can be challenging to get off the ground if you’re new to the world of digital marketing. The good news is, the affiliate marketing space is welcoming and full of people willing to help you build the skills and the audience you need to thrive!

The Verdict: Affiliate Marketing vs MLM 

If you’re looking for a way to make money online, affiliate marketing is a safe and independent business model. You can choose your partnerships, experiment with the type of affiliate you want to be, and begin earning without almost zero upfront costs. Simply choose products you love or brands you believe in and promote them with genuine enthusiasm to your online audience. Any sales you make will earn you direct profits!

MLMs, on the other hand, are problematic for most participants. You won’t likely achieve their profitability claims unless you’re near the top of the pyramid and have a vast network of customers and recruits. MLMs require you to buy products upfront, pay tribute to your recruiter, and often have unhealthy requirements for salespeople. That’s why the majority of people in an MLM ultimately lose money.

Affiliates can develop real-world marketing skills and pursue personal business goals by choosing quality brands and valuable products to build their business around. Here on ClickBank, we make affiliate marketing easy!

We’re proud to host hundreds of Platinum affiliates who generate sales of more than $250K on our platform each year. Will you be next?

Taking the Right Path as a Marketer

So, is affiliate marketing like MLM? The answer is a resounding “no!”

While both business models require you to develop your marketing and sales skills, affiliate marketing is essentially just digital marketing. Your job as an affiliate is to grow an audience or run paid ads while promoting products you believe in. All you have to do is share a link with potential customers – then, you can earn a commission when your audience follows those links to make a purchase!

MLMs are a pyramid scheme that requires buying products to sell (often in person), paying tribute to those above you on the totem pole, and likely losing money to a rigged game. Staying wary of MLMs (and anything that looks like an MLM) is the smart thing to do. Fortunately, affiliate marketing has nothing to do with MLM or pyramid-style selling – and you don’t even have to buy the products to make sales!

If you’re looking for a way to build a business selling products online safely and easily, you should get started as an affiliate on ClickBank. We make it easy with resources like ClickBank for Beginners to help you take the first steps toward your business as a professional affiliate!

Join ClickBank as a New Affiliate

Ready to start your affiliate marketing journey? Be sure to sign up for a free ClickBank account.

Next, jump into Spark by ClickBank, a premier affiliate marketing education platform from the experts at ClickBank that will unleash your inner digital marketer and pro affiliate.

We look forward to welcoming you into the ClickBank affiliate family and watching your rise to success!