Affiliate Marketing Versus Network Marketing (MLM): Income formula Revealed!
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Both affiliate marketing and network marketing pay people for referring a product or service. What then is the difference between affiliate marketing and network marketing?
The difference is best explained in terms of the way compensation is structured to pay for performance. Because of the many hybrid forms of compensation payments available now on the internet, to a newbie scouting for business opportunities, it is easy to get confused over the many terms and definitions used. In evaluating compensation plans, it is essential to understand the subtle difference between the two models. You want to find out…which model yields more income?
What is affiliate marketing? Affiliate marketing is usually done online. In its simplest form, affiliate marketers are compensated on a one time transaction only. Unlike products offered in a MLM business, affiliate products are often ones that a customer would only need to purchase one time. Thus, the more the affiliate marketer sell, the more they make. This is quite akin to direct sales albeit made via the internet.
Affiliate marketing has a compensation plan based on performance measures. For instance, if the affiliate marketer is successful in the form of sales, clicks, registrations, etc, he/she gets rewarded. The desired action as a means of compensation is already pre-agreed upon by the affiliate merchant and him/her.
In a short space of time, the affiliate marketing model has also evolved to a 2 level (or in some cases, up to 5 levels) compensation plan. In the popular 2-tier version, for instance, you (as an affiliate of a particular e-book merchant) will earn commission when you sell a book to person A and if person A signs up to be an affiliate and manages to sell to person A1, you get compensated too, in addition to person A.
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