In the ever-changing marketing landscape, both affiliate marketing and network marketing have emerged as powerful strategies, presenting profitable opportunities for businesses and individuals alike. In this article, we will outline the differences between affiliate marketing vs network marketing.
Both have their advantages and disadvantages. However, after reading this article, you will gain a comprehensive understanding of both options, enabling you to determine the ideal venture for your needs and preferences.
Let’s get started.
Affiliate Marketing vs Network Marketing
Affiliate marketing is using online platforms to promote another company’s products or services in exchange for a commission on sales or leads. Network marketing, on the other hand, is a business model where individuals promote products or services and earn commissions from their own sales and the sales of their recruited team members.
Comparison Table
Comparison | Affiliate Marketing | Network Marketing |
Definition | Generating sales or leads for a company's product or service in order to earn a commission. | Independent representatives making person-to-person sales, and building a network of partners and salespeople to assist with lead generation and closing deals. |
Skills | An understanding of the audience is important. Basic content creation skills may be necessary. | Sales, leadership, team building, & relationship building. |
Cost | Affiliate programs require no upfront payment. Your online platform must meet their requirements however. | Costs vary, but you'll need to invest some money to buy your products. |
Product Ownership | Affiliate marketing products are never owned by the affiliate. | Upon purchasing products, they essentially become your assets available for selling. |
Difficulty | Beginner friendly, anyone with basic website/ social media skills can get started. | While it may seem accessible to get started immediately, it is equally easy to fail without the necessary skills. |
What is Affiliate Marketing?
Affiliate marketing is a performance-driven approach in which advertisers reward affiliates for directing traffic or generating sales for their website or products. In essence, the advertiser assumes the role of a retailer, while the affiliate acts as a content publisher.
Affiliate marketing is sometimes confused with digital marketing. However, it is important to note that whilst similar they are not the same. To help illustrate how affiliate marketing operates, we have developed this diagram for reference:
The current global market size of affiliate marketing is over $17 billion whilst the American affiliate marketing market alone is worth over $6 billion (Kinsta). By 2027, the affiliate marketing industry is expected to grow to a whopping size of $27.78 billion.
With a market size so substantial it’s easy to see why affiliate marketing is a lucrative opportunity to take up. What’s more, anyone with basic knowledge of blogs, websites, or social media can start with minimal to no investment.
Amazon Associates is one of the most popular affiliate platforms taking up 43% of the total affiliate market share. Some of the other best affiliate programs include:
- ShareASale
- Impact Radius
- Awin
- Rakuten
What is Network Marketing?
Network marketing is a business model where people sell products or services directly to customers and build a team of distributors. Currently, the network marketing industry has an estimated global size of $180 billion.
Distributors earn money by selling products and recruiting others to join the network. As the team grows, distributors can earn additional income based on the sales of their downline. Network marketing companies provide training and support to distributors. It’s important to research the company and its products before getting involved in network marketing.
You may be familiar with some popular network marketing companies, which include:
- Avon
- Herbalife
- Younique
- Body shop
Network marketing is often criticised for resembling a pyramid scheme, but it’s important to differentiate between the two. Whilst the hierarchal structures are similar, pyramid schemes focus more on recruiting participants. This constant recruitment process is what sustains the pyramid scheme.
Network marketing companies, on the other hand, emphasise the sales of products or services to the end consumer. Distributors are rewarded for selling products and services, not just recruiting more people.
5 Differences Between Affiliate Marketing vs Network Marketing
- Affiliates promote products or services on behalf of a company and earn commissions for each successful referral or sale. Network marketers on the other hand directly sell products or services to consumers and earn commissions on their sales.
- Affiliates do not need to build a network or recruit other members. Network marketers are encouraged to build a network of recruits or downline members to increase their earning potential.
- The primary focus of affiliate marketing is driving traffic and conversions through online channels. With network marketing, building relationships and networking with others is crucial for success.
- Affiliates have little to no control over the product or service being promoted. Network marketers often have more control and involvement in the products or services they sell.
- Affiliates typically have lower earning potential per sale, but there is often less risk and investment involved. Earning potential in network marketing can be higher, but it often requires significant time, effort, and investment.
Affiliate Marketing vs Network Marketing: Which is Better?
Determining whether affiliate marketing or network marketing is better depends on individual preferences, skills, and goals.
Affiliate Marketing may be better if you:
- Want to promote products/ services without the need of building a team
- Value flexibility and independence in your marketing efforts
- Are comfortable with potentially lower earnings per sale but with less risk and investment.
- Prefer a model that primarily relies on driving traffic and conversions through online channels.
Network Marketing may be better if you:
- Value building relationships and networking with others
- Are willing to invest time and effort into building a team
- Want a model that can lead to high earnings through a downline structure
- Want to be more involved with the products or services you are selling
Ultimately, the “better” option depends on your personal strengths, preferences, and long-term goals. It’s important to research and evaluate both models thoroughly, considering factors such as your skills, resources, desired level of involvement, and the specific opportunities available to you.
