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.
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”.
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.
Nope…I don’t think that’s really the case either.
Affiliate marketing is best described as an entry to online network marketing. Affiliate products are easier to sell, likely to involve one rather than an array of products and therefore, less expensive. For instance, an e-book is likely to have an associated affiliate program while access to a membership site of digital products is more likely to pay for recurrent renewals of membership.
In conclusion, there is always no harm in joining different programs whether affiliate or network marketing ones. Just be sure that you understand how you are paid and channel your efforts accordingly. Afterall, your goal is to build multiple sources of income. You have a choice to represent what or which combination of products/programs work best for yourself.
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