According to Wikipedia: “Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s marketing efforts. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site.
On the other hand: “Multi-level marketing (MLM), (also called network marketing, direct selling, referral marketing, and pyramid selling is a term that describes a marketing structure used by some companies as part of their overall marketing strategy.
The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduce to the company, creating a downline of distributors and a hierarchy of multiple levels of compensation in the form of a pyramid. The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing.”
If you’re considering creating a home business online then you really need to consider the differences between these two approaches because your decision could mean the difference between success and failure with your new venture. Just by reading the definitions above you can see there are major differences between the two Internet marketing techniques.
Many so called “Newbies” (new to internet business people) seem to choose the affiliate marketing path and there are several very compelling arguments as to why this is the case. First of all affiliate marketing is much more economical when compared to network marketing.
Affiliates don’t incur the expense of having to purchase someone else’s product as is most often the case with MLM. Affiliate’s product is supplied for them so they can concentrate on marketing their offering to their potential customers. AM is also cheaper in terms of having no overhead costs by way of housing the product or providing shipping and handling and financial services for payment. MLM sometimes have high initial startup costs usually related to purchasing the companies products.
Networking companies usually require associates to provide their clients directly either by cold calling or by enlisting friends and relatives. This has been a major criticism of MLM stemming from suggestions of exploitation of personal relationships. Affiliate marketers, in contrast, usually recruit customers through traditional affiliate marketing techniques.
MLM’s reputation online can also be a drawback when starting a home based business. In the past MLM companies have been the subject of controversy and have been the target of lawsuits because of their marketing tactics and promises of untold wealth made to their associates. Networking companies have been accused of creating pyramid schemes and price fixing with regard to their products.
Their approach in terms of recruitment of associates has also come under fire in the past and some have been accused of using cult like tactics to motivate their sales people. Affiliate marketers however work at their own pace and rely on nothing but their own initiate and hard work to succeed on the web.
Of course all network marketing companies don’t operate in the same manner but these are certainly important considerations for anyone contemplating an online home business career and should not be taken lightly.
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