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If you’re looking to get into a new business, network marketing and affiliate marketing may be the options for you. But what are these two types of business models?
In this article, we’ll look at the pros and cons of each model in order to help you decide which one is right for your business goals.
Table of Contents
Insights
- Network marketing involves building a commission-based sales network with the potential for high income, but has the disadvantage of high-pressure sales tactics and potential pyramid schemes.
- Affiliate marketing involves promoting products for a commission with the advantage of low start-up costs and flexibility but the disadvantage of lower earning potential.
- The best model depends on individual goals, preferences, and strengths, as both can be profitable with the right approach and effort.
Network Marketing model
Network marketing is a business model that uses independent contractors to sell a product or service.
It is based on a ‘team’ structure, where profit refers not only to the direct sales you can make but also to the overall sales volume of your team.
In network marketing, you can become an independent contractor and build your own business from the ground up with no start-up costs or inventory requirements—and no major investment in time and money like with MLM programs.
Network Marketing pros and cons
MLM / Network marketing is an excellent way to make money. It is not the best or fastest way, but it has been around for decades and is still going strong. You can build yourself and your business through networking with others in your field, social media, cold calling, and other methods.
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It is not a get-rich-quick scheme that you can fall into overnight or even within months or years of working hard.
However, if you work on building yourself and your network, you will eventually be able to earn an income from this marketing system that goes beyond just getting paid for one sale here or there!
Affiliate Marketing model
Affiliate marketing is performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s marketing efforts.
Now, let’s break down what affiliate marketing is and how it works:
1. Commission
You are paid a commission by the affiliate network for every sale you generate, whether directly or indirectly.
For example, if someone clicks on your link to buy something and then makes their purchase at Amazon, you get credit for that sale.
2. Models
Generally speaking, there are two main types of models used by online retailers:
- CPA (Cost Per Action): it’s a model that relies on a user performing a particular action. This could include completing a form, submitting an order, or visiting a landing page. The algorithm adjusts rates automatically to obtain the largest number of conversions possible. The price is only charged when a certain action is completed.
- CPS (Cost Per Sale): in this model, the fee is only charged when the sale transaction is completed. High commissions are frequently associated with low model efficacy.
3. Extra earnings
Sometimes, affiliates share in profits from sales generated from their referrals.
Affiliate Marketing pros and cons
Affiliate marketing is a great way to create a passive income stream. You can set up your affiliate website / social media channel, put it online, and then continue generating sales without doing anything else (except promoting your site or social media channel).
Even if it’s a great way to make money online, it is not easy.
First, there is no ‘magic formula’ to succeed in affiliate marketing.
There are many variables: the type of product or service promoted, the percentage of commission on each sale, the duration of tracking cookies, and the marketing strategy used (SEO, social media, video marketing, paid advertising, etc.).
Second, the price to pay for a potentially profitable ‘passive’ business is the need to possess a high level of digital marketing expertise.
Which model is the best?
Once you know the differences between network marketing and affiliate marketing, you can better decide which option is right for your business goals.
While some people may use the terms “network marketing” and “affiliate marketing” interchangeably, there are differences between them.
Network marketing is a direct selling type involving recruiting others to sell products or services under you. On the other hand, an affiliate marketer makes money by promoting other companies products online or offline.
Both can be profitable
Affiliate and network marketing can be profitable, but I recommend you focus on your skills and realistic goals before choosing the one that fits you.
Network marketing is a business model where you promote a company’s product or service for compensation. This payment could be in cash or products from the company itself.
You don’t have to worry about things like SEO, PPC ads, solo ADS email campaigns, and all other aspects of digital marketing because these are taken care of by someone else (your upline), who will take care to train you and help you.
On top of this benefit, your earnings from network marketing are stable over time since they come directly from your customers’ purchases.
FAQs
Which one is the best: network marketing or affiliate marketing?
There is no definitive answer as to which one is better since it depends on individual goals, preferences, and strengths; both network and affiliate marketing can be profitable with the right approach and effort.
What is the difference between network marketing and affiliate marketing?
The main difference between network marketing and affiliate marketing is that network marketing involves building a sales network with commissions on sales and recruitment, while affiliate marketing involves promoting products for a commission without recruiting other affiliates. Additionally, network marketing often involves higher earning potential and higher pressure sales tactics, while affiliate marketing typically has lower earning potential but more flexibility and lower start-up costs.
Is affiliate marketing MLM?
No, affiliate marketing is not considered MLM (multi-level marketing) because affiliates do not recruit other affiliates to join the program. They only promote products or services for commission. MLM involves building a sales network with commissions on sales and recruitment.
Can network marketing and affiliate marketing be combined?
Yes, it’s possible to combine network marketing and affiliate marketing by creating a hybrid model that allows distributors to earn commissions on their own sales and on the sales of the people they recruit while also allowing them to promote products or services for commission.
How can I choose between network marketing and affiliate marketing?
The best way to choose between network marketing and affiliate marketing is to evaluate your strengths, preferences, and goals. Consider factors like earning potential, start-up costs, sales tactics, and the products or services you will promote.
Conclusion
We hope this article has helped you understand the difference between network marketing and affiliate marketing.
While both are great ways to make money online, they are very different from each other.
If you’re looking for a more passive income stream that doesn’t require much time or effort on your part, then affiliate marketing may be right for you.
However, if you want something more hands-on, like a team working together towards a common goal, network marketing could be your answer!
Take some time to consider which option is best suited for your business goals before making any decisions about which one would work best.
Resources
- Affiliate Summit – A leading global affiliate marketing conference and trade show that provides educational sessions, networking opportunities, and industry insights for affiliate marketers, brands, and vendors.
- Affiliate Marketing Mastery – An online training program created by online marketing expert Stefan James that provides step-by-step guidance on how to build a successful affiliate marketing business, covering topics such as niche selection, product promotion, email marketing, and traffic generation.