In the realm of online entrepreneurship, distinguishing between Affiliate Marketing and Network Marketing is crucial for making informed business decisions. Affiliate Marketing involves promoting products or services and earning a commission for each sale generated through your unique referral link.
On the other hand, Network Marketing, often known as Multi-Level Marketing (MLM), centers around building a network of distributors who not only sell products but also recruit others to join the distribution network. (that is scam)
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What is Affiliate Marketing?
Affiliate marketing is a performance-based marketing strategy where individuals, known as affiliates, earn commissions for promoting and selling products or services on behalf of a merchant or business.
The affiliate receives a unique tracking link, and when a customer makes a purchase through that link, the affiliate earns a percentage of the sale.
This arrangement benefits both the merchant and the affiliate, as the merchant gains increased exposure and sales, while the affiliate earns a commission without having to create or own the product.
Look at this Image for Better Understanding.
Key Characteristics of Affiliate Marketing
Affliliate marketing is not a scam like pyramid scheme or network marketing. It is a genuine thing which you can use safely.
1. Legitimate Business Model
Many companies in different industries use affiliate marketing, which is a proven and genuine business model. Even one of the biggest companies, Amazon, has its own affiliate program.
Here are the Amazon affiliate links that look like: https://amzn.to/3tIWXUH
2. Transparent Commissions
Commissions in affiliate marketing are typically transparent and clearly defined. Affiliates earn a percentage of the sales they generate, and these rates are agreed upon in advance.
3. Focus on Product or Services
Affiliates in this model are primarily concerned with promoting and selling a product or service. There is no recruitment aspect involved.
What is Network Marketing?
Network Marketing or MLM or Pyramid schemes, on the other hand, are fraudulent schemes that often pretend as legitimate business opportunities. The main thing about a pyramid scheme is that they promise you big profits not from selling things, but by getting more people to join the scheme.
Participants are required to make an upfront investment, and the scheme relies on a constantly increasing number of recruits to sustain the payouts.
Key Characteristics of Network Marketing
1. Recruitment Focus
The core element of a pyramid scheme is the recruitment of new members. Participants are often required to bring in others to join the scheme, creating a pyramid-like structure.
They mainly targeted college students or people who are poor or from middle class family. They easily got trapped in this rich quick scheme.
2. Lack of Tangible Products or Services
Pyramid schemes typically lack legitimate products or services. The emphasis is on recruiting, and any products involved are often of low quality or nonexistent.
Most of their products are soap, facewash and cream etc. (Which are of local brand)
3. Unsustainable Structure
Pyramid schemes are inherently unsustainable because they rely on an ever-growing number of recruits. As recruitment becomes challenging, the scheme collapses, leaving many participants with losses.
Distinguish Between Affiliate Marketing and Network Marketing
To differentiate between affiliate marketing and pyramid schemes, it is essential to evaluate the business model's core elements. If the primary focus is on selling products or services, and commissions are earned through legitimate sales, it is likely affiliate marketing.
Conversely, if the emphasis is on recruiting others, with little or no emphasis on genuine product sales, it may be indicative of a pyramid scheme.
How do I check the MLM scheme?
These are some simple steps by which you can easily check any mlm scheme before falling into that scheme.
- Check the company website (what they actually do)
- Type company name in Google and add scam, "Company Name Scam."
- Check out information about the company on YouTube.
If you got any one lead after doing these three points, simply back off from that company.
