Affiliate Marketing And Multi Level Marketing The Advantages And Disadvantages Of Both
If you have been searching for ways to make money, you are likely to have heard about, or at some point come across both Affiliate Marketing and Multi Level Marketing. In this article I will be discussing both the advantages and disadvantages to both business models.
First here is a brief description of the differences between the two business models
Multi Level Marketing and Affiliate Marketing.
Multilevel marketing, abbreviated as MLM, is a marketing strategy where a company sells its goods through a network of distributors.
Affiliate marketing on the other hand involves a merchant or a company paying a particular amount of commission to an affiliate for making a referral to the business, or selling its merchandise.
Let’s now take a closer look at Multi Level Marketing works, and what the advantages and disadvantages are;
How Does MLM Work?
MLM works through recruitments. A distributor is invited to become a distributor through another distributor or through the general advertisement lines.
If the distributor’s choice is to work directly with the company selling, then he will earn commission by selling the products and also through recruiting other distributors, by getting a portion of commission the other distributors get.
Advantages of MLM
• Low startup cost – the initial cost of starting the business is low compared to other traditional marketing. The main reason behind MLM is giving hope to other markets and developing a successive marketing plan.
• Source of Residual Income – it gives one chance to enjoy extra income as other companies do. When the initial effort of recruiting a distributor is over, you can claim your extra earning from their income earnings.
• No limit to income earned – unlike other employment, you can earn as much as possible through marketing. Mastering the art of marketing products and recruiting new distributors in your line gives one limitless income earning option.
• Does not require employee hiring – multilevel marketing involves two or more business entities working together independently. By having a network of independently operating businesses, one can work comfortably without worrying about employees and work with people who have a common business goal.
• Simple Operation Strategies -traditional marketing requires companies to issue inventories to their marketers. MLM requires a company to use modern technology and tools such as internet and telephony. Scarping inventory in marketing makes a business agiler to any market condition.
• Leverage – the owner of the business can be able to generate a large income from the simple working strategies and minimum operating cost. The MLM help people to get what they want and also assisting other people to start their business which can be done using limited resources.
Disadvantages of MLM
• The business is a continuous process- although it looks like a sit-earn opportunity, you need to work hard in marketing products and businesses especially when you are a beginner.
Even when you are established, you still need a prospect. The business is a continuous process. Building a strong team and reputable network is a hard task and requires a lot of patience and hard work.
• Lack of personal motivation – a person who starts to work for his/herself may lack personal motivation, especially when working alone. Working at home will cause distraction and concentration to your work may be lowered.
• The absence of premises – anybody can publish anything on the internet whether is valid or not. Many people have a problem of believing the existence of a business if they cannot physically locate it.
• The pyramid structure – the earning are based on your level of the structure from the product provider. The logic follows that a person who recruited you to earn a certain amount of commission from the earning.
This might discourage some who may feel others are not working but receive income.
Now let’s take a look at affiliate marketing and see what the main advantages and disadvantages of this business are.
How does Affiliate marketing work?
Affiliate marketing works on the principle of referral. If a promoter refers a buyer to a product which eventually the buyer will purchase then the promoter gets a commission. This happens if the buyer bases his or her purchases on your reviews or recommendations.
Advantages of affiliate marketing
• Wider market – the merchant get a wider market to sell their goods and services resulting to more sales without spending extra time to search for new customers.
• Transparency- the merchant is able to trace the origin of sales or referral. This gives the merchant guarantee for return on investment.
• Cost effective – the merchant will not incur any extra cost to acquire a new customer unless a referral or a purchase is made. This is because the affiliates are paid only when the desired action takes place. This ensures you get what you pay for.
• Affiliates require only to post an advert on their site which will have a vast audience and can earn from views and purchases of their prospective viewers. This makes it an easy way of earning income.
• Consumer feedback – visitors to marketing site can provide valuable information to the affiliate concerning the market trends and demands.
The marketer can communicate to product providers on current market dynamics. This will help merchants offer the best to their prospective customers.
• Faster Traffic Scale- recruiting more affiliates will allow you to scale traffic faster. The larger the number of pages you are linked to, the more the opportunity you have to convert the site users into paid customers.
This will provide you with a way of potentially improving your ranking in the search engines and will complement your existing search engine optimization efforts.
Disadvantages of affiliate marketing
• Know who you are dealing with – a twisted merchant may leave or close a program without paying the affiliate. The merchant may also pay lesser commissions than the actual program had stated. This leads to lesser income to the affiliates.
• It is legit as long as the affiliate is legit – false advertisement will destroy the reputation of the affiliate and the merchant.
• Affiliate links may be hijacked, and the commission is lost to those who steal them.
• The affiliate has no control over the programs offered by the merchant. If there is a better deal from a competitor, the only way is to wait for the dealer to change the offer.
It is clear in my view that the affiliate marketing pros outdo the advantages of the MLM marketing strategy.
Affiliate marketing does not leverage the multi-level commission tier of MLM. You earn from both recruiting new distributors to your line, and making a referral to different product and merchants.
The greatest problem with MLM is that you cannot count on yourself alone to get the job done. You become totally dependent on people to have the job done. You require an efficient team ready to buy ideas and strategy of working.
Affiliate marketing gets the advantage of earning 100% of the benefits of his/her efforts.
Why should you work and share a part of your commission with someone who you are not sure he/she is working?
Affiliate marketing is free to join, and you choose the products to promote making it the best choice.