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I have to start this particular
article with this disclaimer. I have nothing against MLM
(Multi-Level Marketing) or those who have found their niche
within it, unless they don't know what the word 'NO' means or
they don't realize that a funeral is not the right place to sell
toiletries or washing powder (why did those two come to mind?)
I've have been seeing Affiliate Marketing compared to MLM for
years now and to be quite honest, I really thought that the
difference between the two was so obvious that a comparison
could never be made. Not so! People, who obviously don't
understand what Affiliates do and how their programs work, are
assuming that it is just another 'MLM' business model. Nothing
could be further from the truth.
So, my mission today is to demonstrate the (obvious) difference
to those who would compare the two, once and for all.
Firstly, the popular MLM business models that have been around
for years, long before the advent of the Internet, are well
known to most people, at least, I assume they are to those that
make the comparison I speak of. Otherwise, on what do they base
the assertion that they are the same or even similar? The two
most well known MLM businesses, we’ll call them the two "A's",
in fact, both market very good quality products and, by all
accounts, service their customers very well. I think the aspect
or idea of MLM that causes some Affiliates to often be concerned
about the comparison is the memory of the MLMer who tried to
sell perfume or hand cleaner at a Baptism.
Basically, without going into huge amounts of detail, MLM is a
network (also known as ‘Network Marketing’) of distributors, who
SELL products to the distributors they have recruited. The
distributors make profit on the products they sell to their
‘underlings’, and so on down an often very long line. Some
Affiliates DO have massive 'Downlines' and they do make sizeable
sums from the 'residual' commissions generated by those who
joined under them however, Affiliate Marketing is NOT an MLM
model, even if there is a 'Downline'.
In Affiliate Marketing there is no dependence on those who join
underneath for you to earn a good income. It is a business model
in it's own right and doesn't rely on the 'Downline' to generate
the bulk of the income. Residual commissions are usually very
small and are simply an encouragement and reward by the merchant
for those Affiliates who bring others into the 'fold'.
Conversely, in MLM you need to have your ‘underlings’ selling in
order to make the decent money.
The major difference, and in my opinion, the whole difference,
is that Affiliates don't BUY products from their 'sponsor', who
buy from their ‘sponsor’, and so on up the line (as is the case
in a true MLM type business). Affiliates, regardless of where
they are in the Downline, simply refer customers directly to the
merchant, who is the only one who does any selling at all.
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All are paid
the same commissions by the merchant. There is no discrimination
between an Affiliate who has no downline and one who has
hundreds (like the bigger discount that MLMer’s get for buying
more product), nor is there usually any difference in commission
between an Affiliate who refers more customers. Affiliates also
do not touch the product, it is delivered directly by the
merchant, whether it be downloaded or physically shipped.
In the nutshell, an Affiliate is in fact, an Agent (not unlike,
say...an Insurance or Real Estate Agent), who is paid a fee for
introducing a buyer to a seller. A 'spotter' for the merchant,
if you like. Affiliates are an advertising tool used by
merchants because of the great amount of website visitors that
their products can be exposed to.
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So, I cannot see how the two can be compared. There are
fundamental differences in the business model and the activities
of those working the program. There is also absolutely no
similarity in the way in which the products are sold and
distributed. Basically, products are NOT sold or distributed by
Affiliates, at all. The merchant does all this after the
customer has been referred. Again, not so in a true MLM model,
where products are physically sold (even at ‘parties’) and
usually delivered by the MLMer.
No cash, checks or credit cards are seen or handled by
Affiliates, who have no need of these often-cumbersome aspects
of any business. MLMers collect payment and generally use that
to pay for the goods that they have purchased from their
‘sponsor’ and resold. The number of hands that MLM products pass
through before they get to a user can be astounding. Not so in
Affiliate Marketing. The goods are sold once, from the merchant
to the buyer. Finito.
NO, to be honest, I simply cannot see how there can be any
confusion. Regardless of what the real reason is for these
comparisons, one thing is certain; Affiliates do not like being
told they are involved in MLM. Perhaps MLMer's feel the same way
about Affiliate Programs. I don't know, but I'm sure both are
all very nice people :-)
** This 'Author's Resource' must be published intact with links
active when copying or publishing this article **
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