Is Affiliate Marketing A Pyramid Scheme? is affiliate marketing a mlm, mlm vs affiliate marketing pros and cons
Is Affiliate Marketing A Pyramid Scheme? Yes or No
In today’s economy, the digital space allows anyone to earn passive income from different sources. Businesses are always looking for ways to increase sales and brand awareness by selling to a huge audience in the digital space.
There are different forms of marketing. Some businesses use affiliate marketing while others use pyramid schemes. Over the years, some people see affiliate marketing as pyramid schemes and believe both models are the same. This article highlights the difference between affiliate marketing and pyramid schemes.
What is a Pyramid Scheme?
A pyramid scheme is an illegal business model where a few top-level members recruit new members. The new members pay a certain fee to join and in turn, the new ones bring in more members for a certain percentage of the reward. Note that pyramid schemes get their earnings from the new members. As new members join in, a portion of the recruitment fee is sent to those at the top. In some countries, these operations are illegal.
This is how pyramid schemes work. A company creates an offer for potential marketers. If one can sell a product, they get paid a certain amount as commission and also earn money when they bring new people to the business. They also get a commission when people they introduce to the scheme make a sale too. This model creates a pyramid scheme with different levels of income generation.
What’s So Bad About A Pyramid Scheme?
What is so bad about pyramid schemes you may ask? Well, for one, they are misleading. How many people can be at the top of a pyramid? Just one person. You can make money from the commissions you get from selling a product or from recruiting more members into the pyramid. People at the top milk from those below and most pyramid schemes fall into pieces when there are no new members.
So how about affiliate marketing? What is affiliate marketing and how is it similar or different from a pyramid scheme?
Introduction to Affiliate Marketing
Affiliate marketing is a marketing model that allows business owners to pay marketers for promoting their brand. Affiliate marketers connect a product to a paying customer. Businesses are always looking for ways to make more money from sales. This is why they use affiliate marketers as a bridge to get more paying customers.
Affiliate marketing is based on performance. The affiliate marketer advertises or promotes a product for a business. When a customer buys the product, the brand pays the marketer a cut for making the sale possible.
Because of the commissions marketers get, many people mistake pyramid schemes for affiliate marketing. What are the differences between affiliate marketing and pyramid schemes?
Differences Between Affiliate Marketing and Pyramid Scheme
A pyramid scheme is not affiliate marketing. Because both pay commission from making a sale, people think they are the same thing. However, there are differences between affiliate marketing and pyramid schemes. Let us highlight some of them.
Pyramid schemes usually give unrealistic promises. The idea of going up a ladder and winning a private jet, a car, or thousands of dollars attracts many to go for it. However, just because it sounds too good to be true does not mean it is. Unlike pyramid schemes, you do not get promises with affiliate marketing. Affiliate marketers get paid only when they make a sale. There is no promise of a life of vacation and you don’t get paid for introducing people to affiliate marketing.
Unlike pyramid schemes, you do not need to pay a fee to get started. You can start your affiliate marketing career from your social media platforms with absolutely no cost at all.
Another difference between a pyramid scheme and affiliate marketing is the product. In pyramid schemes, the product is not important. There may be a product but in some cases, it is not important. What is more important is getting new people to join the venture so that those at higher levels can climb up the ladder.
However, with affiliate marketing, the product is important. As an affiliate marketer, you have an audience that trusts your opinion. You can’t sell a product that you don’t trust because your audience will always come back to give feedback.
The aforementioned are just a few differences between affiliate marketing and pyramid schemes. There are many others that clearly highlight the difference between affiliate marketing and pyramid schemes.
In conclusion, a pyramid scheme is not a sustainable business model you should try. It is not worth your time. As opposed to pyramid schemes, affiliate marketing involves legitimate products and a marketing strategy to help a business increase its sales. If a venture needs you to pay to join and focuses on getting more people to join, it is not affiliate marketing.