Is network marketing the same as affiliate marketing? Network marketing and affiliate marketing are often terms used interchangeably, but they are actually two different things. However, it's true that they have many things in common, as both marketing systems aim to promote a third party product and get paid when the product is sold. However, network marketing focuses more on building referrals, while affiliate marketing focuses on actually selling the product.

Network marketing or MLM

With MLM or network marketing schemes you will be making money not only from your sales, but from the sales of people you refer to the network. In fact, most of your money will be made passively from third party sales, what is known as your downline. Network marketing requires you to be good at people, and being able to convince them to join the program under your referral. Over time, this can become a great source of residual income, but choosing the wrong MLM products can also damage your reputation and create enemies.

Risks of Network marketing

There's nothing wrong with a network marketing scheme that works and produces revenue because the product is a good quality product that sells. While not everybody on your downline will be a success, at least most of them will feel they have got value for money and you have delivered on your promises. On the other hand, if you enroll people on a program that costs money to join as a promoter, and that program doesn't deliver what you promised, you'll be making a lot of people angry. Many MLM schemes expect you to actually create relationships with your downline distributors, and you cannot create that if the program is just a pyramid scheme where people lose money unless they are at the top.

Affiliate marketing

Unline MLM, affiliate marketing schemes are based around generating sales for your advertisers, with many of them offering a comission on sales generated by people who signed up to the program through your affiliate link. This means you are the only one responsible for the success of your affiliate business, and choosing the right products to promote.

Affiliate marketing risks

Besides falling prey to affiliate marketing scams, the most obvious risk of affiliate marketing is that the product you are trying to promote doesn't sell. Unlike MLM, you cannot just let the ball roll and sit on the beach while your referrals do the hard work for you. If you want to make money with affiliate marketing you'll need to keep finding new products to promote, and work at marketing them.

Affiliate marketing vs Network Marketing

If you like establishing rapport with your customers, and are good at selling ideas, network marketing may be the best option for you. Keep in mind that you are selling a business opportunity as much as a product, so make sure that business opportunity actually delivers. After a few years of working hard on building your salesforce you may be able to actually earn a nice passive residual income, without more effort on your side. On the other side, if you prefer just to promote products, you can make a lot of money through affiliate marketing without having to build a downline. However, you will need to keep finding new products to promote if you want to increase your earnings, since there will be a cap on how many sales you can make. 

Beware of pyramid schemes scams

Some affiliate and network marketing scams are actually MLM pyramid schemes. Look for warning signs such as the promise of a six figures income for no effort, or a request that you purchase a "starter pack" with everything you need to get started, because you may find later on that the business model is you selling that starter pack to others.