Affiliate Marketing Versus Network Marketing
Both affiliate marketing and network marketing pay people for referring a product or service. What then is the difference between affiliate marketing and network marketing?
The difference is best explained in terms of the way compensation is structured to pay for performance. Because of the many hybrid forms of compensation payments available now on the internet, to a newbie scouting for business opportunities, it is easy to get confused over the many terms and definitions used. In evaluating compensation plans, it is essential to understand the subtle difference between the two models. Ultimately, you want to understand'which model yields more income?
What is affiliate marketing? Affiliate marketing is usually done online. In its simplest form, affiliate marketers are compensated on a one time transaction only. Unlike products offered in a MLM business, affiliate products are often ones that a customer would only need to purchase one time. Thus, the more the affiliate marketer sell, the more they make. This is quite akin to direct sales albeit made via the internet.
Affiliate marketing has a compensation plan based on performance measures. For instance, if the affiliate marketer is successful in the form of sales, clicks, registrations, etc, he/she gets rewarded. The desired action as a means of compensation is already pre-agreed upon by the affiliate merchant and him/her.
In a short space of time, the affiliate marketing model has also evolved to a 2 level (or in some cases, up to 5 levels) compensation plan. In the popular 2-tier version, for instance, you (as an affiliate of a particular e-book merchant) will earn commission when you sell a book to person A and if person A signs up to be an affiliate and manages to sell to person A1, you get compensated too, in addition to person A.
Let's now go on to talk about what network marketing is. In the network marketing model, the compensation plan works in a similar fashion, except that compensation by the sponsoring company can be paid up to several, several or unlimited levels. The number of levels and restrictions in terms of payout is very much dependent on the arrangement offered. As arrangements can vary from one company to the next, this makes comparisons of the various compensation plans available out there difficult. So be sure to read all the fine print!
At any level, a network marketer has the potential to earn a direct referral fee for directly recommending someone and a leverage fee when one of his/her 'downlines' is successful for referring friends to the same network. In the popular binary plan adopted by many network marketing companies, each person in the network has two 'legs' or 'downlines'. If more people get referred to the network, they automatically go below the 'legs'.
Ongoing customer use is what creates the real residual income in network marketing. The MLM business can generate earnings for a very long time even after the initial years of hard work and investment. With a solid network, residual income is assured at each renewal period of a 'downline'. If the product or service involved in is one that has to be reordered at each renewal period, income should just keep coming in like clock work.
How does the difference in affiliate marketing and network marketing translate into in terms of building your customer relationships and your earnings power? In the network marketing model, to ensure that your 'downlines' renew at each period, you must ensure that you build up a good relationship with them. It is essentially a people-build-people and a leader-build-leader business. The ability to generate huge sums of money is increased exponentially when the network grows. The potential to make huge sums of money is thus greater here if you can employ the efforts of others to help grow the business vis-?-vis the affiliate marketing model. In affiliate marketing, your earnings ability is limited by your own direct sales plus an additional of 1, 2 or up to 5 levels of leveraging efforts.
Having described the above, it would seem that to maximise your income, it is best to join online network marketing programs as opposed to affiliate programs.
any question feel free to contact me
Akila Wedasinghe
Comments (23)
Edward Effah
2
Banker..
interesting article happy to be in the mist as well ...
Akila Wedasinghe
6
Professional
thx everybody i really appriciate your comments
Ron Lester
6
I appreciate the kind kudo, Jibril. I wouldn't have said anything, had it not been for Network Mentor writing this article. Any time you can write an article, creating a lot of discussion, is a success. At least, in my mind, it is. Great job, Network!
Jibril Babangida Bal...
8
Consultant.
Correct idea,thanks Ron569 for more info.
Ron Lester
6
Nice info. I'm a bit surprised you didn't mention that network marketing is more focused on building your own business. In most cases, you have to focus on recruiting(hiring quality people) members, and have to purchase a certain amount of product every month.
In network marketing, there are two reasons to have product on hand. Personal usage or for customer samples. I think it's important for folks, who desire a serious income in network marketing, to realize they're going to need to s
Ahmed Uzair
7
Web Designer and Internet Marketer
very helpful information for me..
Thanx
Chukwuekwu Okonta
12
Forensic accountant
Made things clearer to understand.
Peter M.
7
Pro Internet Marketer
nice info..
R. Weatherly
16
Business Professional
Nice Article, I done both, and you can keep Network Marketing. I still have products piled up in my bedroom.
Toshiba Burton
7
Social Media Consultant
Very good points in this article thanks for sharing
Akila Wedasinghe
6
Professional
thank you for all the comments.but if somebody looking for a serious money i would recommend network marketing for them.always remember successful mean not how my money you make.succeesul mean how many people's live better of bez of you.according to that affiliate marketing can't even close to network marketing.
Pastor David Turnips...
4
Get Paid into $1299 position Just by bringing in 6
Very informative,bullet points well thought out ,info I can use.
Jan Chem
8
Engineer, Entrepreneur, Educator
Well, your article is very informative to take a difference between an affiliate and network marketing.. but for me those people who doesnt know to invite a lot of people, affiliate marketing works best.
Jibril Babangida Bal...
8
Consultant.
Very good write-up,but in network marketing one can only earn a commission if he/she buy his/her own as a personal order while in affiliate marketing you don't need to buy to earn a commission what is require there is to send someone to your site and a commission will be earn base on what the site owner offers,it is a rule that must make a sale,so that is why may people like affiliate marketing.
Louis H.
9
Affiliate Marketer
Excellent overview of the difference between the two marketing platforms, Both have a good, and bad depending on the product or the persons ability to sponsor affiliates, but in either case if you are motivates you will do well.
Trond Hov
11
Business developer
Nicely written, I have been in both games for 12 years and seen a lot of both bad and goods in both setups. But the affiliate grows steady, the Network marketing can get a buzz that makes your head spin :-)-- The Power of good networking cant be compared with Affiliates-
Corey Blackmur
8
Blackmur Global
@ Adriana - on your comment - "knowledge is power" - I would add to that - Knowledge is Power when used effectively and with integrity" - just 2 cents...........have a great day
Adriana Auguste
6
Very interesting & knowledge is power!
Steve C.
7
Online Marketer
This article is very well written and the information can be used by most everyone. Thank you/
Cindy Bolley
16
HHCTB?
Another great post...
In fact about the best comparison I have read between the differences of Affiliate and Network marketing.
I think the success of an affiliate marketer depends
on their own ability to be a self-motivator.
Network marketing is working toward your retirement
Affiliate marketing is more about saving for your retirement
Cindy