When I first get started on this online journey, I often ask myself whether affiliate marketing is the same as a pyramid scheme or not?. So I decided to do some research and this is what I found.
Is affiliate marketing a pyramid scheme?
“Well, the answer is no. First and foremost, you have to be clear on how affiliate marketing actually works and how pyramid marketing works (stern).
Affiliate marketing and a pyramid scheme don’t work the same. In affiliate marketing, you’re helping a company or an individual sell their products from their website and you earn a commission on every product you sell.
While, in a pyramid scheme, you make money by recruiting people into a business, and the more people that join the business, the more money you’ll earn.”
“The difference between affiliate marketing and pyramid marketing is that in affiliate marketing, there’s nothing like recruiting people to a company or business and earning commission on their sales. But rather you earn money simply by recommending products to people.
But, in pyramid marketing, you only make money by referring people to join a certain business or company, and if they do join you earn money.”
Read on to learn more about affiliate marketing and a pyramid scheme…
Table of Contents
Affiliate Marketing VS. Pyramid Marketing The Different Between Both
One thing about a pyramid type of business is that a person who recruited you will probably earn more income than you.
However, affiliate marketing is completely different thing altogether. In affiliate marketing, the affiliate (thus, the person promoting or marketing the product).
Get a full percentage of the sales of the product through their own marketing efforts without sharing the profit with anybody.
Furthermore, in affiliate marketing, you can scale your income without increasing the number of people within the company or the business.
And you do this simply by selling different products to the same person over and over again as long as you have them on your email list and they are interested in the product.
But in a pyramid scheme, you can’t scale your income unless you recruit more and more people under you.
And the people under you also have to recruit more people under them before you can think of making any substantial income.
Also, another amazing thing about affiliate marketing is that most of the affiliate programs out there offer monthly recurring commissions.
Meaning, you simply refer a customer into the system and if they purchase the product or service.
You get paid a one-time commission and then a monthly recurring commission as long as your referral remains a paid member in the system.
But in other ways round. Thus, in a pyramid scheme, there is nothing like a recurring commission…
If you stop referring new members into the system, you don’t earn a recurring commission.
Another cool thing also about affiliate marketing is that – it can put you in a position where you get to earn money passively without putting in any active work.
How possible is that? Great question!
Typically affiliate marketing is done via blog and YouTube.
These two platforms are search engines and people are constantly running searches on this platform for information and product to buy.
You can create and post valuable content once and years later that content can keep generating tons of traffic into your business and offer.
And as you start to get those traffic on your content and offer, over time, you’ll probably start to generate sales in your business.
(Only if you set up things correctly).
But in pyramid marketing, there’s nothing like that… Instead of them teaching you to do value-based marketing (content marketing).
And how to attract quality prospects.
They teach you to go and talk to your friends and family and get them to join you.
And for some, they teach you to join Facebook groups and start posting your opportunity link there, and someone might accidentally join you.
This sort of marketing technique puts a lot of people in a position whereby they struggle really hard to make it in a recruiting type of business.
So, to put it simply – Affiliate marketing is not the same as pyramid marketing. Affiliate marketing is a real, legitimate online business that involves adding value to people’s life, selling products, and earning commission on every initial sale of a product.
Most of the time, people that confuse affiliate marketing with pyramid scheme marketing, obviously know little or nothing about affiliate marketing, its benefits, and how it works.
Now, let’s quickly dive deep into each of these businesses and see how both works.
How Affiliate Marketing And Pyramid Marketing Work?
Okay, in this section, we are going to be looking at what affiliate marketing and pyramid marketing are and how both work.
So, let’s quickly dive into that.
Here is a great definition I found online on what is affiliate marketing:
Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. Source
My definition: Affiliate marketing is a process or a practice of marketing or selling other people’s products or services in exchange for a percentage of any sale that you make.
How Affiliate Marketing Works In A Simple Step.
This is how the whole concept of affiliate marketing works in 5 simple steps:
- You find a company and join.
- You select a product of your choice to promote.
- You’ll be given a unique link (the purpose of this link is to record, keep track of every customer you send and how many sales of products you have generated).
- You’ll then promote this link on your chosen platform (ideally, YouTube, blog, or social media).
- And when someone visits your link and makes a purchase, you get a percentage of the sale.
The reason why, nowadays, so many companies offer affiliate programs is that it’s less expensive than spending money on advertisement.
And the good side of affiliate marketing for people like you and I is that. We can make money with affiliate marketing without creating our own product.
(you simply find other people’s products and promote them as your own).
Another benefit of it is that…
You don’t have to deal with customer support, refund, payment, and so on.
Finally, one exciting thing about affiliate marketing is that you can work anywhere around the world so far as you have a laptop and an internet connection.
Click here… To learn more about how to start and make money with affiliate marketing.
Pyramid Marketing (scheme)?
Upon running a few research, here is the definition I found on pyramid type of marketing.
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. Source
My definition: A pyramid marketing or scheme is any type of business that goes on to expand as time goes or as more people join and take the shape or structure of a triangle.
How Pyramid Marketing Works In A Nutshell.
The whole concept of pyramid marketing begins with one particular business between two people who want to make money online.
An offer is then made by the company to refer or get at least two people under you.
And for every successful member you refer into the system, there will be a commission earned.
And finally, for each additional person that your referral also brought into the system, that person gets to earn a commission.
And you also get a percentage of all their revenues they make as well.
Pros and Cons Of Affiliate marketing And Pyramid Scheme
Affiliate marketing is proven to be one of the best and easiest ways of making money but it has ups and downs. And so do a pyramid scheme as well.
No online business out there is guaranteed to be 100% perfect, they all have pros and cons. So, let’s take a look at some of them below.
Let’s start with…
Pros Of Affiliate Marketing.
- In affiliate marketing, the payment model is the same for everyone. No matter when you started, or who first introduces you to the business.
- You’re your own boss and every money you make belongs to you, even if you’re the last person to join the program.
- You have the potential to make as much income you want as long as you know what you’re doing.
- Affiliate allows you to SCALE your income, without increasing the number of people within the company.
As affiliate marketing is rapidly growing, the competition in affiliate marketing is extremely high as more and more people are jumping into this industry.
And as hundreds and thousands of people are promoting the same product as you, it going to be very hard to succeed. The only way to win is to beat the competition.
Pros Of Pyramid Marketing
With a pyramid type of business, you only benefit if you have a lot of people under you.
- Pyramid type of business is considered to be an illegal form of making money online and it costs money to start which you’ll probably not get back.
- A pyramid type of business has a ladder system where you only make more money if you’re the first person to join and recruit more members under you.
Affiliate Marketing And Multi-Level-Marketing (MLM) The Same?
This is also another argument that often takes place between affiliate marketing and MLM.
“To put it simply- affiliate marketing and MLM are not the same. The only connection between these two is that they both pay commission for selling products and services (stern).
In MLM you have to build a team or network because it involves direct selling but in affiliate marketing, there’s nothing like building a team or network because you only promote a product through an online platform, ideally YouTube, blogging, social media”
And you earn a commission whenever someone clicks on your link and purchases the product.
If you’re in the MLM business, a network is extremely important for your success. But in affiliate marketing, it is not necessary.
But, here’s my point, whether it is affiliate marketing or multi-level marketing, networking with other people is extremely important.
Because connecting with other people can literally help you grow your business and influence which will eventually help you make a bigger income in your business.
“If you’re in any business and you’re not connecting with other people in your industry to see what’s working and what’s not working for them, you cannot achieve your desired goals, influence, and success”.
Wrapping up… In my opinion, I think both of these business models are amazing, however, it all depends on the one you want to go for.
But between these two I’ll recommend you go in for affiliate marketing.
Affiliate marketing beats all forms of online business models.
It’s a legitimate way to earn money online, it’s scalable and it can filthy make you rich if you put in the work, time, and commit to learning all you can about it.
To learn more about affiliate marketing and how to build a profitable online business leveraging the power of affiliate marketing… Check out my Resource Page for my #1 recommended program.
Is Affiliate Marketing Legal?
“To put it simply – yes, affiliate marketing is absolutely 100% legal and a safe business model, that’s why almost all big companies in the world offer affiliate programs. Companies like Amazon, Walmart, eBay, Apple and so on have affiliate program”.
Most of these companies use affiliate marketing to attract new idea customers and sell into their business.
And as an affiliate of these companies.
You’re then compensated by the company for selling their product, however, how you market the product would make a big difference in the eyes of people.
Whether affiliate marketing is legal or illegal.
However, to avoid all that simply be real and don’t spam people with your affiliate link.
Try to be helpful by solving people’s problems and pain and at the cost of that you can then recommend them to your product.
Taking this approach is far better than spamming your link all across the internet… Online nobody wants to be sold to.
So, again be mindful of how you market your product.
All Big Brands Use Affiliate Marketing
Since affiliate marketing was introduced on the internet in the year 1994, most of the big brands have adopted this form of marketing to promote their products and services.
Top companies in the world such as Amazon, eBay, Walmart, Best Buy, and among the rest all leverage the power of affiliate marketing to promote their business.
The reason behind this is that it helps them sell their product this way even faster rather than door-to-door marketing. (thus, old form of marketing).
Or naturally waiting for people to come to their store to buy their product.
Also, another reason why companies adopted affiliate marketing as a form of promoting their product is that…
It allows them to provide added products to the market which makes their company feel more trustworthy in the marketplace.
In addition, it allows companies to reach large targeted customers which they could not reach by themselves.
And they do this simply by offering an affiliate program and allow affiliate marketers to join their program for free to promote their product.
And these affiliates used the products themselves then created valuable content, reviews around the product.
And this maintained some level of TRUST around the company that owns the product in the eye of people.
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So, as at the end of the whole thing, the answer is A BIG NO, affiliate marketing is not a pyramid scheme neither is it a scam.
A lot of people don’t have any idea about affiliate marketing and they get confused and call it a pyramid scheme.
For some, they don’t know where to get started from and they get frustrated and call it a scam.
Though there are a lot of scam programs out there, affiliate marketing still remains the best way to make money for anyone getting started online.
However, there’s more to affiliate marketing. “To be successful with affiliate marketing, you need to educate yourself and learn some skills such as content writing, email marketing, etc”.
Don’t just jump into it without first understanding the whole concept of (what it is about, how it works, pros and cons, do’s and don’t, etc).
Affiliate Marketing FAQs
Is It Hard To Make Money In Affiliate Marketing?
“Yes, making money with affiliate marketing is really hard especially when you’re just starting out. There are so many people taking the route of affiliate marketing which makes it very saturated, however, that does not mean it impossible (stern).
In order to succeed in affiliate marketing, it requires training, a little work, dedication, effort, knowing a little bit about funnels, and perseverance”.
Can You Become A Millionaire From Affiliate Marketing?
“Yes, you can absolutely become a millionaire doing affiliate marketing but first and foremost, you need to understand it isn’t easy and takes time, effort, persistence, and a whole lot of sacrifice in the beginning (stern).
In order to achieve that you need to focus on methods like SEO, content marketing, email marketing, influencer marketing, and some sort of paid advertisement”.
Why Do Affiliate Marketers Fail?
“There are so many reasons why many people fail with affiliate marketing, one of these reasons is that they focus on selling rather than providing value. In contrast, affiliate marketing is a value game in order to succeed at it you need to provide value (stern).
Another reason is that they approach affiliate marketing with the wrong mindset. They think affiliate marketing is a quick and easy way of making money online, in reality, affiliate marketing is a long term process, it takes time and patience”. Read more here.