Affiliate Marketing vs. MLM – What’s The Difference?
For many people the idea of making any money online sounds like a dream.
Whether you’re looking to generate a side income, or replace your main income with an online business, the range of opportunities is vast. If you already have a website, or are looking to start one, you may be wondering about what the best ways to monetize it are.
In particular, there are two popular choices – affiliate marketing and multi-level marketing (MLM).
But which one should you choose, and why?
Both business models can be lucrative, but which one will be best for you will depend on several factors. We’ll explore both methods in detail and explain the differences between them, and how we recommend maximizing your revenue opportunities.
What is Affiliate Marketing?
Affiliate marketing is a business model in which you promote other companies’ products or services, and earn a commission for every sale generated through your affiliate link.
It’s an excellent way to make money online without creating or stocking any products yourself.
How It Works
There are two parties involved:
- The promoter (e.g. the blogger, digital marketer, or publisher)
- The vendor
It’s a performed-based model since you only get paid when a sale is made.
The amount of income you can earn depends on the quality and effectiveness of your content and the site’s traffic numbers.
The more traffic you send to the vendor, the more you’ll be likely to earn.
For example, Wirecutter has generated $150 million in online sales – all from writing product reviews and including affiliate links in their blog posts.
What is MLM?
Multi-level marketing, or network marketing, is a business model that relies on independent sellers to sell a specific company’s products instead of retail outlets. This puts the responsibility onto the independent distributors.
These distributors aren’t employees; rather, they’re individual business owners that recruit their own network of sellers to help them sell the product.
The MLM model encourages members to recruit more sales reps.
How It Works
Think of the MLM model as a pyramid. In this example, Alice is the sponsor who has recruited five distributors, who in turn have recruited more sellers.
The higher a person is on the pyramid, the more commissions they’ll earn.
MLM companies typically provide a detailed compensation plan that spells out the commissions you earn for recruiting a specific number of people.
When an MLM May Be an Illegal Pyramid Scheme
MLM companies are often associated with a pyramid scheme.
According to the Federal Trade Commission, a pyramid scheme is when the company focuses more on gaining new distributors rather than the actual product sales.
Ideally, MLMs should have at least 70% of their goods bought by people outside their organization, not by the distributors.
Typically, money is made from receiving commissions from their downline sales or direct sales to consumers.
However, the commission structure for an MLM company can be complicated. Factors usually include:
- Your level or status within their commission structure
- How many products your network sells
- The number of recruits within your downline
Differences Between Affiliate Marketing vs. MLM
While both models are selling other people’s products, the difference between the two is night and day. Here are the key differences between affiliate marketing and MLM and why we believe affiliate marketing is the better business model.
Affiliate programs are free to join, making them easily accessible for anyone to start with. However, MLMs require some startup costs to gain access.
To get started with an MLM, you’ll need to pay membership dues, purchase starter kits, and purchase your own inventory to achieve an active status. It is highly likely that you’ll also have to pay for conferences and other training materials.
With affiliate marketing, you simply need a WordPress site and a domain to get started!
Affiliate marketing has vastly more product selections to choose from. You can simply sign up to be an affiliate on large networks such as Amazon and Clickbank, with millions of products to choose from.
This allows you to choose items that solve a problem and align with the needs of your readers. On the other hand, MLM has a low selection of products, which doesn’t give you much room to offer products that your readers want.
No Pressure to Hit Quotas
When done properly, affiliate marketing isn’t like a sales job. You provide honest and authentic reviews of products in your niche and recommend products to help your readers solve their pain points.
In the blog extract below, the author is providing in-depth knowledge and advice about acne and what to look for in acne treatments. For anyone experiencing this condition, the blog post should prove genuinely useful, and the reader may well go on to pay for a solution that is recommended and likely to address their specific needs.
Your job is to create high-quality content and recommend products only where it makes sense.
However, MLM companies often place a lot of pressure on persuading friends and family members to buy from you, which can be a much less enjoyable way to make money.
Your income from your affiliate marketing business can continually grow over time. As your website and brand become more popular, you’ll receive more traffic, which in turn increases your income.
Your affiliate site becomes an asset that brings in a growing passive income.
However, MLM models will reset the sales and commissions for distributions every month. Some companies require that distributions meet specific recruitment or sales targets to qualify for bonuses.
If you miss your target, you could lose a rank, which lowers your commission.
No In-Person Meetings
While MLM businesses can be run online, it’s generally done in person. You’ll need to show the opportunity plan to your friends and family with the hope of converting them into distributors or repeat customers.
This often leads to global meetups, sales and leadership training, and other events where you receive education on recruiting more people and selling more products in your business.
However, affiliate marketing gives you complete freedom to run your business however you want. You can market the products online through SEO, social media, or email marketing.
How to Build Your Affiliate Marketing Business with AAWP
Starting affiliate marketing doesn’t have to be complex. We’ve boiled down the process into five easy-to-follow steps.
1. Create a Website with WordPress and Sign Up for Hosting
WordPress is an open-sourced website development tool that is completely free to use and very easy to get started with. Providing nearly endless functionality, WordPress allows you to design your site exactly how you want. There’s also lots of support to help you overcome any challenges. The best part is that it’s mobile responsive and SEO-friendly.
Website hosting is a service that provides the space needed to store files on your site and make them accessible to visitors.
Some hosting providers can cost as little as a few dollars per month.
2. Sign Up for the Amazon Affiliates Program and Find Products to Promote
Choose a niche that interests you. Ideally, you’ll have a strong passion and experience with the topic, which allows you to build trust and credibility in the niche. Go to Amazon Affiliates and sign up for their program. This network lets affiliates earn up to 10% on commissions. While the commission rates are a little low, it’s easy to get started, and there’s already a built-in trust factor with Amazon that helps drive up click-through rates.
3. Conduct Keyword Research
Keyword research is identifying phrases that people are typing into their search engines.
The idea is to find keyword phrases with low competition and relatively high search volume. This increases your odds of ranking high in the SERPs (search engine results pages) and attracting visitors to your blog.
Start by making a list of relevant topic ideas around your niche. Let’s say you’re looking to promote the best coffee machines.
You can scroll through the list and begin to narrow your options. This list of keywords will become your topic ideas. Let’s say you chose the keyword “best coffee machine with grinder.” You can create a listicle titled “10 Best Coffee Machines with Grinders in 2023.”
You can also leverage AI tools such as ChatGPT to generate a list of topic ideas you’d normally not think of. It’s as simple as typing, “Give me 10 affiliate article ideas about the best coffee machine with grinder,” into ChatGPT.
As you can see, you immediately get a bunch of ideas you can add to your editorial calendar.
4. Create High-Quality Content Consistently
Next, you want to create content consistently. Show your audience that they can depend on you. Build an editorial calendar and stick to the publishing schedule.
Writing product reviews or tutorials is the best way to make money with your affiliate marketing business. Product reviews provide an overview of the features and how they compare to similar units.
Tutorials are step-by-step guides on how to use the product.
More complex items would require a full tutorial. For example, if you want to sell pellet grills, you may want to have a full tutorial on using the grill to make delicious barbeque or smoked meats.
A tutorial like this allows you to promote the Pit Boss grill along with all of the necessary ancillary products like wood pellets.
The last thing you need to get started is a plugin to help embed those Amazon product links into your blogs. This lets you send your readers directly to Amazon. As your affiliate code is included in the link, you’ll receive a commision fee for the sale. (With Amazon you’ll actually receive a commision fee for everything the customer buys in the next 24 hours, even if they didn’t end up buying the product you linked to – just as long as they clicked on your link first.)
5. Use AAWP to Embed Trackable Product Links to Your Blog Posts
The easiest way to promote specific Amazon products is by using affiliate product boxes.
These are convenient, easy-to-insert sections with information about the product that dynamically updates as the information on Amazon changes. For example, when the product image, price, or description change, the affiliate box changes as well.
Grabbing the shortcode to embed into your site is made simple with the AAWP plugin.
When the AAWP plugin is downloaded, head over to the desired Amazon product page you want to promote. Then you can choose the format of how you’d like to embed the product on your blog, such as in a standard product box, table view, grid view, etc.
Then generate the shortcode to copy into your WordPress site by adding a title and description into the AAWP Chrome extension.
AAWP even allows you to create comparison tables for your affiliate products. This lets you highlight the main differences between the items, so readers can compare which product is right for them.
You can search for products directly within the plugin using an ASIN or product name.
Furthermore, you can customize the table by selecting which attributes you want to compare, such as price, thumbnail, and star rating.
AAWP provides plenty of flexibility by allowing you to customize the design and configuration to your needs. Additionally, there’s a click-tracking feature, so you can analyze which products are clicked on the most.
This helps you to build your content strategy around products that are the most profitable and in demand for your blog.
There you have it! Now you know the differences between affiliate marketing and multi-level marketing. Finding a reliable MLM company can be difficult. It’s much easier to pick a niche for your affiliate marketing business and find products you’re knowledgeable about.
That’s why promoting products on Amazon is perhaps the easiest and fastest way to get started. Amazon is a merchant that everyone trusts, which helps you to increase conversions. To succeed with affiliate marketing, you’re going to want a plugin like AAWP that seamlessly embed links into your WP blog. You’ll be able to track the performance of your Amazon affiliate links, allowing you to adjust your marketing strategy and increase your earning potential. Download the AAWP plugin for free today!