Network marketing like MLM or multi level marketing has
been around for ages. So has affiliate marketing. However,
what works better is a matter of personal preference. Here
we explain what each of these entail.
What is affiliate marketing?
Affiliate marketing is carried out online and all affiliate
marketers get their compensation on each transaction. In
affiliate marketing the kind of products sold are those
that are purchased only one time by the customer. Thus the
more the marketer sells, the more his or her chances at
gaining income online. The compensation plan in affiliate
marketing is purely based upon performance benchmarks. Thus
the more the sales, click throughs and registrations the
affiliate marketer manages to get, the more the chances of
income. The actions which will result in compensation are
outlined between the marketer and merchant before starting
the contract.
What is network marketing?
The compensation plan in network marketing is quite similar
to affiliate marketing. However, the main difference is in
the number of levels through which compensations can be
achieved. The sponsoring company can pay the network
marketer upto several or even unlimited levels. However,
the original agreement will outline the restrictions in the
maximum amount of payment as well as the maximum number of
levels the payout can reach. Usually individual
arrangements and contracts will differ from one network
marketing program to another. This makes comparison quite
difficult. The network marketer earns a direct referral fee
which is a result of his recommendation of a friend or
acquaintance. He may also avail a leverage fee which is due
to his "downlines" referring their friends and associates
into the network layers. Differences between the two
There are many differences between affiliate marketing and
network marketing as outlined below:
Presence of layers: While network marketing has several
layers or strata of people referring other recruiters into
the system, affiliate marketing is devoid of any such
layers.
Ongoing effort: In affiliate marketing one needs to put in
continual efforts in order to gain sustainable income on a
long term basis. However in network marketing just with
initial efforts, one can continue to reap long term
dividends because of the leverage fees associated.
People to people: Network marketing success largely depends
on the ability to have good interpersonal skills and
enhancing the "downlines" more. However affiliate marketing
is more of an individual effort which focuses on gaining
maximum profits through individual attempts.
Types of products sold: In the case of network marketing
the kind of products sold are primarily those which will be
bought by customers again and again. Thus the sale is a
repeat process. However in the case of affiliate marketing
the type of products sold are such that customers will buy
them only once.
Ease of selling: In network marketing it is more difficult
to sell products to customers. It's because supply far
outweighs demand. Because of the many layers and sellers
trying to sell the same product, the likelihood of the
product getting sold gets diminished. In the case of
affiliate marketing, it is easier to sell these products
especially since they involve more than one type of
product. Thus there are more choices and options in an
affiliate marketing program.
Stagnation: In network marketing it is very easy to reach a
point of stagnation. In other words, once the layers start
to increase, the chance of selling the product reduces.
This can result in the network marketing chain stagnating
in terms of sales. On the other hand, in the case of
affiliate marketing, although initially a lot of effort and
time maybe needed and sales maybe sluggish, over time the
results can be exponential sales.
Downlines: In the case of network marketing, each person
has two downlines. These two downlines have two persons
under them and so on. However in the case of affiliate
marketing, the maximum number of layers it can go to is 5.
Final thoughts
Both affiliate marketing and network marketing have their
own benefits and drawbacks. No matter which marketing
method you opt for, be sure to assess all compensation
plans and choose the marketing tool wisely. At the end of
the day, you want to maximize your profit potential and it
is solely up to you to decide which model suits you best.
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must get Affiliate Elite at http://www.affelite.com Also if
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