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By Stephen Brennan
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. 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.
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 :-)
Stephen Brennan is the author of the popular ebook title ‘The Affiliate Guide
Book’ (http://www.ebooks.online-plus.biz>‘The) – The Definitive guide to
Affiliate SUCCESS. He also runs The Home Based Business and Affiliate Center
(http://www.online-plus.biz>The) and HomeBasedBiz Safelist (http://www.
pearlsofwealth.com/HomeBasedBiz/>HomeBasedBiz).
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