When businesses pay “affiliates” for promoting their products or services to their followers, it is called Affiliate Marketing. The affiliate typically earns a percentage of the items sold.
Affiliates are paid based on sales.
Affiliates can earn commissions by running digital advertising on their website for the partner company or incorporating links to products or services in their content on social media. They must however mention the possibility of earning these commissions on their website or social media pages.
Both the affiliate and the company promoting the item, benefit from affiliate marketing.
What Is A Pyramid Scheme?
A pyramid scheme is an unsustainable business model in which you invest money in a bad product to join a chain and network, rather than driving product sales and increasing company revenue.
These schemes work like pyramids, with the business owner recruiting a large number of distributors for his product and then asking each of those distributors to recruit a large number of new distributors separately by allowing them to invest money and asking the new distributors recruited to do the same.
Affiliate Marketing Is Not A Pyramid Scheme
In several ways, affiliate marketing differs from a pyramid scheme. For starters, affiliates are not compensated for selling a company’s products. The products are chosen by the affiliate and they get commissions for selling those products.
Affiliates are not compensated for referring customers.
Illegal pyramid schemes promise huge profits based on the number of people recruited into the program rather than actual investments or sales. The person at the top of the pyramid is the only one who makes money because they are paid every time someone in the lower tier recruits new blood.
Affiliate marketers resell the products of other companies and brands through digital channels such as blogs and social media.
Their sales are tracked using affiliate links, which are provided within their affiliate account of the affiliate program or network they have joined.
Here are a few affiliate marketing resources to get you started;
- What is Affiliate marketing?
- 7 Affiliate marketing Niches That are Profitable
- How to Build an Effective Affiliate Marketing Funnel
- 3 Affiliate Marketing Scams to Avoid
- What is Mobile Affiliate Marketing?
Despite the similarities between affiliate marketing and pyramid scheme, their marketing tactics are different. Let’s start with their similarities;
- Both marketing methods are used to increase product sales, and both are commission-based.
- Both have a history of deception, but one has a longer one.
The table below shows the difference between Affiliate marketing and pyramid schemes.
|S/N||Affiliate Marketing||Pyramid Scheme|
|1.||You don’t need money to get started.||To get started, you must make a one-time or monthly purchase or join the chain.|
|2.||The company can be operated from anywhere in the world.||You cannot work from anywhere.|
|3.||Before you start selling, you can select your products and services.||You cannot select your products and services because you can only sell the products of the company you joined.|
|To advertise the product and drive sales to the company, you can use blogs, social media, SEO, SEM, email marketing, and other methods.||You can’t promote or sell your product through blogs and social media because you need to communicate directly with your customers or individuals by attending seminars or events.|
|5.||There is no prior marketing or sales experience required.||You’ll need marketing and sales experience to get started.|
|6.||It is a technique that benefits all marketers who sell products with fixed compensation rates.||It is a strategy or structure designed to benefit those at the very top of the pyramid.|
|7.||You can sell products from well-known brands that are legitimate.||Since the company does not advertise them anywhere and the public and marketers are unfamiliar with them, the items you sell are not authentic and legitimate.|
|8.||As an affiliate, you won’t have to spend money on marketing materials because companies will provide them for free.||Even if you purchase the product to begin, you may need to spend additional money on things like seminars, training, transportation, and marketing.|
|9.||You make money by selling products or referring customers to a company’s website.||You make money by recruiting others into the structure or chain, and those who join or are recruited by you, must recruit more people to keep the chain going.|
|10.||The entire system and technique are mathematically and practically feasible.||The entire structure and plan are theoretically and practically impossible.|
|11.||You only sell corporate items to individuals or consumers, rather than recruiting people in a chain structure, and you use fewer emotions because people who need things can read reviews you write online before purchasing them.||These marketers use a lot of emotions to get people to join the structure by promising them that they will make a lot of money after joining and bringing in other people.|
|12.||There is no pyramid or chain system, and no marketers are linked.||Unlike affiliate marketing, you must buy from someone and work for someone else, known as an upline and downline. All marketers are also linked in a chain system.|
|13.||It’s real and many people who are interested in it make a lot of money every month.||It is not as genuine as affiliate marketing, and those interested in this method waste a lot of time and money.|
Here Is How To Identify A Pyramid Scheme:
- Before purchasing a product, consider its quality, pricing, and market demand.
- It’s a pyramid scheme if your income is determined by how many people you recruit and how many of them recruit new people, rather than through independent sales.
- Before you start, your friends or recruiters will tell you that you will make millions passively and be your own boss.
- A seminar will be required to learn about the amazing product that has changed the lives of thousands of people. Be wary, as this is the standard method of recruiting people in most pyramid schemes.
- You will be compelled to travel, attend seminars and activities. They will also make you purchase items you do not require.
Affiliate marketing and pyramid schemes are different. Affiliate marketing is a legitimate way to make money online. It is not a get-rich-quick scheme. It takes perseverance and effort. When you get dubious offers like “bring 5 people and make $50 million,” think twice before accepting them.