Affiliate Marketing vs. Network Marketing

Is affiliate marketing better than network marketing? What are the major differences between the two and which one is better?  That depends who you ask, but in my personal opinion I would have to answer that they are both good, but not for everyone. They both have pros and cons.  Neither is easy.  Both have huge upside potential.  Both require a unique skill-set and lots of hard work.

In the paragraphs below I will go into more detail and cover each business model in greater depth, so you can decide which one is best for you.

*** As a quick disclaimer I should tell you upfront that I am involved in both business models and think favorably of both of them.

AFFILIATE MARKETING

Affiliate marketing is when you earn a commission for selling someone else’s product for them. Basically, the owner creates a product, but wants other people to sell it for her. The owner processes the payment, provides customer service, manages the inventory, and ships the product.  They are typically referred to as the vendor or affiliate manager.

As the affiliate, your job is simply to send targeted traffic to their offer (website), and they do the rest for you.  Assuming the affiliate has a decent product, offer, lead capture system, website, good conversion rate, and follow-up, you should make some sales.  In most cases, you will earn 10% to 75% of the selling price, depending upon what you are promoting.

Some of the leading affiliate programs online that I promote are:

The major advantage of affiliate marketing is that you don’t need to create your own product. You don’t need to process payments, deal with customers, handle returns, collect sales tax or anything else.  You don’t need to coach, motivate, train and mentor others.  You simply focus on marketing the product or service and let the affiliate manager do the rest.  That’s really the beauty of it.

The major disadvantage of affiliate marketing would be smaller profits.  Selling someone else’s product is almost always less profitable than selling your own product.  Another disadvantage can be lack of support.  Most affiliate programs do not have good training or resources, so you will have to figure everything out on your own.  The final disadvantage is no leverage.  Your income is based strictly off your own efforts.

NETWORK MARKETING

On the other hand, network marketing is when you work with a company and earn commissions by using the product yourself, selling the product to customers and by building a team of distributors who do the same thing. In both examples you are an independent contractor.

The advantage of network marketing is that you can build a residual income by building a team of customers and distributors. Simply put, you can leverage yourself through others, which you typically can’t do with affiliate marketing. You can build a small or large team and earn a small commission from the total team’s sales volume.

The major disadvantage of network marketing is that the products are normally overpriced and are difficult to sell to retail customers.   Plus, customers can order your products directly from Amazon and eBay, at a cheaper price than you can buy them for as a distributor (in many cases).  In addition, many people have a bad perception about network marketing, so they are reluctant to get involved.

Also, attrition runs rampant in most network marketing organizations creating a revolving door in your organization. While you can make a significant income in network marketing, it’s very hard to do.  Even if you are a sponsoring machine, most people you recruit will do NOTHING and then they will quit within 90 days, if not sooner.  So if you ever stop building your business, there is a good chance it will implode and crumble.

WHY I LOVE AFFILIATE MARKETING

With affiliate marketing, your odds of success are pretty high once you learn how to market and advertise.  You could also argue that your odds of success in MLM are pretty high once you know what you are doing.

Assuming you can find a good affiliate product to promote, with a good payout, and you learn how to generate traffic, you can make a boat load of money via affiliate marketing.  Of course, there is a chance you could still fail, but your risk is minimal.

If you fail at network marketing, you might end up losing several hundred dollars or more depending upon what you spent money on. With affiliate marketing, you could lose the same amount of money depending on how much you spent on advertising.

As a quick disclaimer, I should state that MOST affiliate marketers don’t earn even one penny. The failure rate in affiliate marketing is very high, probably similar to network marketing.

What I love most about affiliate marketing is that you don’t have to babysit adults, like you do in network marketing. You don’t have to invest hundreds of hours coaching, teaching and mentoring others, only to see them quit 30 to 90 days later.

Also, most affiliate products are much easier to sell, because they are in demand and aren’t overpriced (compared to many MLM Products). With many affiliate programs there is a residual income (continuity programs), just like network marketing.  Some affiliate programs even have a MLM Component where you can recruit other affiliates and earn overrides off their commissions.

The final thing I really love about affiliate marketing is that I get paid based upon my personal efforts and performance, not what other people do.  No, I don’t have the leverage of others like I do in network marketing, but if I am good at creating traffic and selling, I can make a lot of money and just focus on myself.

network marketing vs affiliate marketingFINAL THOUGHTS

Ultimately, you will have to choose which business model is best for you. I do both.  I love the MLM Industry, and enjoy the benefits, but I also do affiliate marketing.  Neither is fast or easy money.  Both require lots of hard work and a unique set of skills.

Even better, many network marketing opportunities are now offered as affiliate opportunities. These programs are frequently referred to as top tier programs.  They allow you to earn large, upfront commissions for selling something, anywhere from $100 to $10,000 per sale.  I also think it’s a good idea to utilize both business models, especially if you really love MLM, and want to build your business online like I do.

I like to think of affiliate marketing as the picks and shovels business within network marketing. Why not make extra money selling leads, training, tools and systems to your prospects, in addition to your MLM Business?  You may even try MLM for a while and then decide that affiliate marketing is a better fit for you.  Or, you may decide to build your MLM Business like an affiliate marketing business.

What are your thoughts?  What do you think about affiliate marketing vs. network marketing? Leave a comment and let us know.  I look forward to hearing from you.  Have a great day.

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8 thoughts on “Affiliate Marketing vs. Network Marketing

  1. Kristen

    This is a great post, and a great breakdown of both affiliate and network marketing. I am new to both, but am personally drawn more to network marketing. I admire how you have found a balance and are able to do both!

    Reply
  2. Bonnie

    I’ve seen the video above. It does a good job explaining the difference between mlm and affiliate marketing. I recently signed up for as an affiliate marketing. I’m pretty new to this. I’ve read a little bit on this. Is there any books that you recommend on affiliate marketing you can recommend.

    Reply
    1. chuckholmes Post author

      “How I Made My First Million on the Internet” by Ewen Chia is HANDS DOWN the best book on affiliate marketing and making money online that I know of. You can get a copy on Amazon.

      Reply
  3. Terfa

    I am new in Network marketing and have found your review very useful. How is affiliate marketing done? Can I get materials on affiliate marketing?

    Reply
    1. Greg Boudonck

      Affiliate marketing is really quite simple, but as Charles said, there is really no residual income.

      The key to affiliate marketing is in namely, having your own websites. Many other websites and companies will pay per click or per lead/sale when someone clicks through from your website.

      You install advertisements for your affiliate in prime locations on your website(s). The affiliate has a special generated code within the link that shows them it came from your site.

      Personally, I am affiliated with Amazon.com, E-bay, Commission Junction (many companies use), Google Adsense, Share-A-Sale, and a few others.

      If you know how to install ads in a fashionable way, it can be a lucrative business. Another affiliate organization is Clickbank.

      I agree that using both models (Network and Affiliate) seems to be the wisest move.

      Reply

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