Having built an entire business from doing affiliate marketing and on occasion experimenting with network marketing as well as seeing a plethora of examples from other people being involved in both businesses and how it turned out, I want to tell you which of these options is better and safer for you to build a business from, in addition to which one is more profitable.
Firstly, let me explain each business model briefly (but clearly) so we know…
The main difference between them…
With affiliate marketing (AM), you are promoting products you generally do not own. You can easily start a business in this field by having just a website, signing up to a program that allows you to promote their products, get a specific link from them, and send people to that link to get paid.
With network marketing (NM), you buy products from a specific company for a generally large price and in large quantities up front, with the goal to resell them to people for a larger price than you initially paid to make profit. In other words, you buy a product and then resell it, but the product purchased is supposed to be high in quality, thus easier to sell.
Now that we’ve gotten those definitions out of the way, let me state that while the specifics of each business are different, when you put them in practice, they actually overlap in many ways and it can be both confusing and clear…
Both models are broadly similar. For example:
With both models, you are essentially practicing AM itself. After all, no matter what product you promote/sell, you are still a middleman aiming to sell something. You just don’t own the product in one model and do in the other.
And at the same time, with both options you are essentially practicing NM because the people you sell to are going to be part of your personal circle. It can be a business circle, it can be a niche audience, an email list, it can even be friends and family (this last one by the way is a bad idea so no matter what, ignore that last option, unless you want to ruin a relationship).
So as you can see, these similarities can often make seeing the real differences between them hard and it is a big reason why a lot of people don’t know the differences and conflate that both these models are the same. They are not as there are a whole host of differences between them we will discuss now, including the many…
Advantages affiliate marketing has over NM:
1) No real cost to start in most cases. Less risk.
Right now, in most cases, you can head over to places like Clickbank, Amazon, BestBuy, Commission Junction, JvZoo and a plethora of other programs out there, register with their affiliate programs and start promoting the products, without any up front cost. In other words, it won’t cost you a penny to become a middle for them.
Now with NM, such an option is out of the question. You HAVE to buy the products you’re going to sell right off the bat. And this poses a financial risk because if you don’t make the necessary sales, obviously your investment will lead to a loss and usually companies that practice NM will have the people who buy the products from them buy them in bulk, meaning you can’t just order 1 product, you have to order a package or the same items in bulk.
2) You promote popular items, for a fair price.
Generally when you practice traditional AM, you are promoting items that are popular and being sold. This usually means the price for these things is pretty well known.
Now the main point here is that with NM, you usually don’t buy the same popular market items, but rather knockoffs and/or supposedly higher quality versions of popular products for vastly more expensive prices.
Now this obviously impacts the person whose thinking of buying something. Let’s say there is a popular weight loss pill called pill A being sold all across the world. It is a huge seller on Amazon and it costs $10 per bottle.
A NM company may have a similar diet pill (B), say it’s better than pill A and sell it for $20. Thus, the consumer, when seeing pill B, who knows about A will essentially be paying twice as much and if they know about the popular pill A on the market, they are more likely to buy it because it is more popular and as an added bonus, it’s cheaper.
And that is another huge reason why many NM companies don’t do so well. They make their initial sale to the distributors (the ones who will then resell the product), but the distributors then have problems selling it to a larger audience.
Now obviously, with good sales techniques, they increase their chances of success, but it is still an huge uphill climb for them when they are trying to sell a product in a market where there’s cheaper and more popular mainstream items competing vs their product.
Fair pricing is huge and no consumer wants to be ripped off. Sure they are likely to pay a little bit more if an item they badly want is hard to find, but with the way NM companies make it, the price difference can be so huge, that one might even think it’s a rip off to get it.
3) A lot less brainwashing going on with AM.
Lots of network marketing companies love to pitch their products as being the most amazing, revolutionary product in existence and they do that to basically make the sale to the distributor. But often times, the claims they make are hyped beyond belief.
With affiliate marketing, because you aren’t buying anything off the bat, it is your choice on how you wish to promote it and while I encourage all of you to do it honestly and try the product before using it, there isn’t that over the top layer of brainwashing in this, at least not as much as there typically is in NM. That’s been my experience.
My final thoughts:
I want to add one more thing before I conclude on this topic:
Contrary to popular belief, network marketing and multi level marketing are NOT the same thing, although they are often seen in one company, and therefore assumed to be part of a single system. Here are their differences if you don’t already know them.
But on the main topic I was talking about, I can absolutely give you numerous advantages network marketing would have over affiliate marketing. However, I have seen far more failed attempts and more money lost in that than I have in affiliate marketing and I have indeed built a huge business from it.
I will say that a person who possess good and great marketing skills can sell just about anything, but if you’re looking to get involved in ANY of the options to above to build a business, don’t do it until you understand it well enough and know the risks.
Each business option requires a lot of effort and experience to create something out of. One of the best ways to start is with a website, a niche audience and to build it up to attract more of the niche audience to it.
I know this explanation may be confusing for a lot of you, but don’t worry. If you wish to get involved in this stuff and become successful in doing so, here’s what you need to do:
If you have personal experience with either option of building a business, I’d love to hear your story and if one or the other (or even both) worked for you. Which do you prefer and why?