I’m going to get into trouble this article because both Network Marketing and Affiliate Marketing are great business models. Having said that, which is better? Both have advantages that the other does not. In my personal opinion you can make money with either one if you: Work, Focus, Commit, Put in the Time and energy.
So why the article? To compare the two business models and determine which has the greater potential for success.
For the beginner who is looking to start a home based business and asking, “How to make money with affiliate marketing for beginners?” or the beginner who is asking, “How to make money with Network marketing for beginners?” I must admit that affiliate marketing is easier to start and has a better growth potential.
Affiliate Marketing is easy, in fact it is much easier to make money with Affiliate Marketing quicker than any other online business including Network Marketing.
For some that statement will cause Network Marketers to make a fist and scream NOT TRUE. Here’s my reasoning. This is my reasoning, so as you read the next few paragraphs, it’s my opinion.
What makes me qualified? I have been in both Network Marketing and Affiliate Marketing. I’ve enjoyed some…not great success in both. After visiting with top people in both, I have come to the conclusion that it is easier to make money with Affiliate Marketing.
In network marketing the focus is to build a team. Until recently, the main focus was not Product but sell the opportunity. Or Recruit people to Recruit people to Recruit people. Product was a by-product. The model was to sell the Opportunity.
Many companies got caught up in this Recruitment only model. Today the FTC have stepped in and “Scolded” these companies or put them on notice to “Cease and Desist.”
Network marketing today is much more “cleaner” than yesterday. But again, the main focus is to build a team.
The main difference between network marketing and affiliate marketing is in order to make money in network marketing, you need a team. Yes you make a small amount of money by your personal sales (required) but your main source of income is over-rides from your team. The more team members the more over-ride, which is really the main selling point of most MLM businesses (though this is a heck of a lot harder than it sounds in most cases).
MLM usually costs or has some sort of monthly minimum order, whereas affiliate marketing is free.
The biggest different between affiliate marketing and network marketing or MLM is one is based of your efforts while the other is based off of your team effort.
Affiliate marketing is different. You never sell products directly to someone. You are the bridge that tells people where to go and buy products. Affiliates make money when the person that they refer to a website buys something.
Image provided by affiliatemarketertraining.com
In order to make money with Network Marketing you need to talk to an army of people (build a team) in order to build your organization to make a sizable income. There are exceptions.
How do you get an army of people? You need to talk to a lot of strangers, then teach those strangers how to talk to a lot of strangers. On average, for every 100 people you talk to you will get 1 business builder. Then you have to train that business builder to talk to 100 to get 1.
Again there are exception. Some will build faster..some slower. The discussion is an Average.
A good friend (I will call him Mike) make a six figure income from his Network Marketing business but it took him over 9 years and a lot of NO’s. He had a lot of “drop-outs” and “quitters.” Mike took a lot of angry comments like, “Network marketing is a pyramid scheme!” or “My mother was in network marketing and it didn’t work!” or “Network marketing it’s a scam!”
I actually need to defend network marketing. Network marketing is not a pyramid, not a scam and will work if you work. The reason he received these comments and more was because there is a lot of misconception about network marketing.
If you’re like many, you may be skeptical of the MLM businesses. Some of the leeriness is based on myths and misconceptions about network marketing, and fears of scams.
If someone became involved in network marketing and failed…they blamed the business…not them self. “My mother, friend, neighbor or whoever…tried and failed” comments was probability because they didn’t work. Most people get involved thinking that people will rush to join the business.
That is how the presentation is designed. It goes something like this: “Sign-up today, talk to everyone tomorrow, do the presentation, and sign them up, make money.”
I agree that a little simplistic, but the intent is the same….maybe a little more elaborate.
Jon M. Taylor, Ph.D. conducted comprehensive research and analysis of the compensation plans of over 400 various MLM companies and presented his findings in his e-book, “The Case (For And) Against Multi-Level Marketing.” His findings, which are posted on the FTC website, are pretty sobering:
According to Taylor’s research:
In the early days, some well meaning people gave false impressions, high pressure tactics, inflated the earning potential just to get people to sign up. They were invited to a “Party” or “Hotel meeting to learn how to make money”
Fortunately that was the past. Today’s marketers are a lot more professional.
Going back to Mike, he is a true professional and because of that, today he has 10,000 people in his organization.
However if you talk to him, he will tell you, that he would not do it again because of the frustration.
If you take those 9 years, the first 3 were a struggle to break even. The next 3 years he started to make money and the last 3 years is where the money started to come in. Most people in Network Marketing will not last 9 years.
It is a frustrating business. The failure rate as you saw above is close to 95%.
Is it a good business model? Yes, but not for everyone.
That same friend, Mike has retired from his business and began an Affiliate Marketing business. Again, if you were to talk to him, he will tell you that he started making money after 3 months. Mike is an affiliate with 4 companies. He has no inventory…he does not talk to people into joining his business…he has no recruiting…no rejections…and no training people to sell….He Has No Team!
Mike has no up-front money to become an affiliate with the companies he represents. Huge advantage over network marketing.
His products are on Ebay, Amazon, his Facebook page, Twitter, YouTube and any other social media at his disposal.
Mike reports to his home office around 9:00 AM and quits around 2:00 PM. He no longer conducts meeting, training sessions, company events…etc.
When someone purchased his affiliate product, the company sends him a commission check.
If he were to start over years ago, he would tell you to start an Affiliate Marketer business instead of Network Marketing.
In addition being an affiliate to the 4 companies, Mike also work with an affiliate training company. In this case he does offer a sign-up package to anyone who wants to get into affiliate marketing. But unlike network marketing, he give a free starter package to his visitors.
Today, he receives a passive income from the affiliate training company plus income from the affiliate companies, that many people would like to have.
The process is very simple. Google a search for a product or products you like or have an interest in. Then see of the company offers an affiliate program. If not, move on to another. When you find a company with an affiliate program, all you do is sign-up, receive an affiliate ID and start promoting that product.
Simple and no money to join.
When a customer purchased a product that you have recommended, the company sends you a commission check.
The process is much more simpler than many people lead themselves to believe.
Using the latest techniques and tools, you can have a top-notch affiliate marketing program up and running quickly without exceeding your budget.
The question, “Is it really as easy as this?” The answer is Yes! Well almost Yes. Successful affiliate marketers use marketing strategies to promote. They have learned the successful strategies over time or have taken a course on marketing.
Many successful affiliate marketers have joined affiliate training companies to learn the basics, and advanced marketing techniques.
Mike was no exception.
Again I’m going to use the imaginary Mike for this example.
I mentioned that Mike is an affiliate with 4 companies. He got those 4 companies by researching with Google for several weeks. Many of the companies he wanted did not offer an affiliate program.
As he continued, he found the 4 companies he now represents. Mike now concentrates on promoting those companies using marketing techniques he learned from the affiliate training company.
To make the most of your marketing efforts, concentrate on the affiliate company that generate the most money and the most traffic, and ditch unprofitable ones.
For example: Promoting baby shoes as one of your affiliates and promoting alarm clicks as another. Which one is preforming best? If baby shoes out performs clocks, drop the clock affiliate and move on to another.
Examine each of your affiliate companies on a regular basis to see how they are performing. If you remove affiliates that are not performing up to standards, then you gain room for new advertisers that can bring in more revenue.
Picking only the super hot products to promote may not help your affiliate sales. However don’t ignore hot products. Typically hot products are around for a short time then they tend to loose out to another hot product. While it’s hot you can make money. Just stay on top, if you see sale to fall, reevaluate.
Another approach is to choose harder or unique products or popular products to advertise. A unique or harder to find product can reduce your competition. Popular products can be very stiff competition.
It is essential that you understand your audience if you are aiming to have success with affiliate marketing. Understanding their wants, and needs is a smart marketing move. Determine why they are visiting your website. What are they trying to find?
Both Affiliate Marketing and Network Marketing are ideal business for the Internet. But to keep it simple, affiliate marketing is the ideal platform for the Internet.
You locating your affiliate company (Partner) through the Internet. Become an affiliate and receive an affiliate ID. You now start promoting your product through the Internet to find your customers. The customer clicks on your recommendation. They are taken to the company along with your affiliate ID. When they purchase, you receive a commission check.
None of the three parties have ever communicated. The Internet is doing all the work 24 hours a day 365 Days a year.
The Internet is a perfect addition to your business.
Savvy network marketers can use the Internet to find people who maybe interested in learning more. By the prospect offering a name and email address the two parties can connect and the network marketer can offer the business opportunity to the prospect.
The Internet has made is simple for both Affiliate Marketing and Network Marketing to be an International Business.
Affiliate marketing is much different than the other great marketing idea, Network Marketing. Affiliates never sell products directly to a customer, they simply recommend. Affiliates make money when the person they refer to a website buys something.
MLM style is direct sales of a product. MLM style is to sell a product to family, friends, neighbors, strangers or anyone who will want or need the product. However the main focus is to recruit people who will sell like you but will also recruit people to sell just like them, building a team.
Unlike affiliate marketing there is one advantage, it is called time.
When a network is able to build a team there are more hours going into his/her business than the hours they are actually putting in. Example: Let’s say there are 6 people in the team and all 6 are working 3 hours a day. That means there are 18 yours a day going into the business. The team grows and there are now 20 people working 3 hours a day. Thats a total of 60 hours per day going into the original network marketer.
Sounds like a great advantage but 95% of the original marketer will never get there because they have either quit or stop building and continue to use the products.
Affiliate marketing has a better return on investment (ROI), since to become an affiliate of a company requires no up-front money. Any sale you make is immediate profit.
As a perfect home base business model both have it’s advantages and disadvantages.
If your okay with rejections, drop-outs and high priced products that you can defend, and success rate of 5% network marketing may be a good choice.
If your more of an introvert, which means your uncomfortable in approaching strangers and pitching business opportunities but would rather work for yourself on your own time and hours without recruiting people, affiliate marketing may be your choice.
Both can provide a good income if you WORK.
Great article on Affiliate marketing: 10 Rules to be a successful affiliate marketer
To your success,
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About Bill Fletcher;
Bill Fletcher is a marketing expert and coach in the use of Social Media Marketing, Network Marketing and Affiliate Marketing. Based in the MidWest, he is the CEO and founder of Planning-4-Success, Master Marketing University and RiteBusiness. Bill’s main focus is helping home based business owners understand trends in marketing.