Nowadays, people are using the terminology “MLM” interchangeably with internet marketing and affiliate marketing, but it’s not all the same. When people sign up, they may be thinking they will learn different information than what’s included, and unfortunately, they can waste alot of time and money as a result.
If you’re here, it’s likely, you’ve seen the terms “MLM”, “Internet Marketing”, or “Affiliate Marketing”, and because of scammers or marketers who are very unclear, you may be confused about what each is, and what distinguishes them from one another. This post will clear up the differences between internet marketing, a MLM, and Affiliate Marketing.
- 1 Why Many People Join
- 2 An Unfortunate Commonality
- 3 What is a MLM?
- 4 What is Affiliate Marketing or an Affiliate Marketing Company?
- 5 What is Internet Marketing or an Internet Marketing Company?
- 6 Signs of a Scam
- 7 Final Words on MLM Business Online vs. Internet Marketing vs. Affiliate Marketing
- 8 Now, it’s Your Turn…
Many ads out today are looking for people who are:
- Discontent professionally
- Want more money
- and, Desire more lifestyle freedom
Often times the ads are preying on people who don’t want to spend lots of time to get the money. As a result, they make the ads with promises like:
- “You can make a full time living with a few hours per day (usually they’ll say something like 10 or less)”
- “You can work from anywhere”
- “Be your own boss”
- or, “No skills needed”
An Unfortunate Commonality
While the desire to have more lifestyle freedom, to make more money, or even to be content with your profession isn’t wrong, sometimes, marketers and advertisers appeal to unrealistic expectations. Then, you’ll have people excited about unrealistic outcomes who are redirected to pay for a program, sign up to become a distributor, learn affiliate marketing, or they’re making claims about learning internet marketing.
Sometimes, they’re selling expensive programs, but even if they’re selling inexpensive programs, it should still offer value. Often times, these ads are scammers, and you’ll be able to identify them by the end of this post because:
1. Internet marketing business, affiliate marketing, and multi-level marketing are three distinct and separate business models–each can be legit.
2. A legit business is not time-based but value based. Rather than being focused on “spending little time”, it should focus on “serving others well”.
3. Every business takes hard work (some more mental than physical but it’s still work).
Once, you understand those three things, then it helps to understand the business model of an MLM versus Internet Marketing versus Affiliate Marketing.
What is a MLM?
MLM stands for multi-level marketing. It’s a direct sales business model where a person can sign up to become an independent distributor of another company’s products or services.
The multi-level component refers to how each independent distributor has the ability to: 1) Sell products and services and, 2) Recruit and train other distributors in exchange for a commission. When you recruit distributors in a multi-level company, you’ll have the ability to earn commissions from your product and service sales, you’ll be able to earn from the distributors you’ve recruited, and even those recruited several lines down.
Other Common Terms Used in a MLM Home Business Opportunity
The Plan: Many MLM companies have a “system” for growing their distributor business and a correlating expected compensation.
Sponsor: The sponsor is the “upline” or person who recruited you, signed you up, and typically, they will train you.
Compensation Plan: The compensation plan outlines how independent distributors earn an income. In order to be a legal company, the plan must focus on product and service sales rather than on recruitment.
Upline: This term is often used interchangeably with “sponsor”, however, the sponsor-of-the-sponsor going up several levels are also considered the “upline”. For example: If rep A recuited rep B who recruited rep C, then rep B and rep A are the uplines of rep C.
Downline: Refers to anyone you recruit or those recruited by someone you’ve recruited. Going back to the previous example with rep A, B, and C, reps B and C would be downlines.
Network Marketing: Multi-level marketing is also commonly referred to as network marketing because the most common recruitment technique is to network, speak to people you know, and recruit from circles of interpersonal relationships.
MLM Legalities and Ponzi Schemes
Historically speaking, there have been quite a few instances where multi-level marketing companies have bad products and more emphasis is placed on recruitment to earn an income. Some of these companies have even been shut down by the Federal Trade Commission for deceptive business practices, but some haven’t been spotted out quite yet, so you’ll need to be careful.
This video further explained Legal versus Illegal Multi-Level Marketing:
What is Affiliate Marketing or an Affiliate Marketing Company?
Similar to multi-level marketing, there’s a growing interest in affiliate marketing. Like multi-level marketing, affiliate can be done as:
- An added stream of income
- A full-time business model
- or, as a side hustle
Affiliate marketing is also similar to multi-level marketing because affiliates are paid for sales of someone else’s products or services.
Differences in Multi-Level Marketing and Affiliate Marketing
The biggest differences that separates multi-level marketing and affiliate marketing are:
- Affiliates don’t typically have to pay to begin referring customers. Some retailers will say you need to be a patron first, but often times, retailers are okay with affiliates promoting products and services without owning them.
- Affiliates don’t normally get paid for recruiting other affiliates. There are some programs called “two-step affiliate programs” where you can be paid for inviting a friend to become an affiliate, but these programs don’t transcend into multiple levels like multi-level marketing companies.
- With affiliate marketing, you get paid for your own product and service sales, and in small instances ( with two-step affiliate programs), you may get paid for a direct referral’s sales. You won’t get paid for multiple levels of recuits.
- With affiliate marketing, the mentorship or support comes from the affiliate manager in each individual company rather than an upline.
- With affilate marketing, the emphasis is typically on product and service sales
What is an Affiliate Marketing Company?
There are three components of the affiliate marketing program: the affiliate, the merchant, and the affiliate network. Either of the three can be considered an affiliate marketing company, however, these are some common definitions for the term “affiliate marketing company”:
A company who teaches affiliate marketing. Example: Wealthy Affiliate.
A company with an affiliate marketing program. Example: Amazon
An affiliate marketer’s business where a large portion of the income is earned thru affiliate marketing. Example: Making Sense of Cents
or, a company who manages affiliates, affiliate payouts, or affiliate marketing programs for others. Example: Rakuten Network
For more on the differences between affiliate marketing and multi-level marketing, check out this video:
What is Internet Marketing or an Internet Marketing Company?
Unlike multi-level marketing or affiliate marketing, internet marketing is a strategy rather than a business model. In business, there are several ways you can inform your target audience about your products or services. For example, you can:
- Buy television commercial slots
- Pay for radio commercial slots
- or, Buy ad space in magazines or newspapers
Now, that the internet has more than 3 billion users, it’s become a very relevant place for entrepreneurs to market. On the internet, they can market by:
- Being listed on directories like YellowPages, Yelp, Foursquare, and others
- Using search engine optimization to be found online by search users
- Creating content like images, videos, blog posts, or podcasts
- Maintaining a good reputation by monitoring reviews, responding, and providing a good customer experience
- By posting good content on social media
- and by paying for advertising to increase visibility and leads
Internet marketing is becoming a more widespread method for marketing businesses of all types (including multilevel marketing businesses and affiliate marketing businesses), but there are many components. Internet marketing has alot of potential, but many entrepreneurs don’t understand the methods, so they hire Internet Marketing Companies like How To Entrepreneur.
What do Internet Marketing Companies do?
Internet marketing companies can perform a wide range of services including:
- Video production
- Graphic design
- Website design and development
- Reputation management
- Search engine optimization
- Directory submission
- Content marketing
- Audio mixing and mastering
- and more…
Some internet marketing companies create software as a service (SAAS Companies) or they create products, which adds another layer of complexity when using the term “Internet Marketing Company”. There are several different models referred to as “Internet Marketing Companies”.
Signs of a Scam
All three business models have legit businesses and scams. You can identify a scam in either of the three by:
1. Making note of claims that can’t be verified.
2. Looking for reviews that tell you a product or service is good quality.
3. Not purchasing because of timed offers, but making purchase decisions based on a pre-concieved desire for a solution.
4. Ensuring that you’re involved with the business because of the product or service rather than the money claims.
There’s alot to filter thru in the marketplace using the terms, “MLM”, “Internet Marketing”, or “Affiliate Marketing”, so you’ll have to do due diligence.
Final Words on MLM Business Online vs. Internet Marketing vs. Affiliate Marketing
The goal of this article was to show the differences between a MLM Business Online, an Internet Marketing Business, and Affiliate Marketing. There’s so much bad information out there, I’m hoping this article helps you out. If you have questions or concerns about this, don’t hesitate to leave them in the comments section. I’d love to help you out!
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Now, it’s Your Turn…
Have you noticed any other differences between a MLM business online, an Internet Marketing business, or an Affiliate Marketing business? Leave your comments or questions below.