Is affiliate marketing a pyramid scheme? Nope! Affiliate marketing is a legitimate business model in which “affiliates” refer customers to products on the internet. If someone purchases a product through someone’s unique affiliate link, they earn a commission for referring the sale. Affiliate marketing is therefore referral based marketing. Anyone can learn to become an affiliate to earn an income from the internet. You don’t need your own products or services to earn from affiliate marketing, which is what makes it attractive to so many people.

A pyramid scheme is something different. With a pyramid scheme, there is usually an incentive to recruit more people with the promise of income, often without a product or service involved. MLM or multi-level marketing businesses are often confused with pyramid schemes too, even though many are legitimate. With multi-level marketing, you can build a team of sales people within your organisation and earn income from the sales they make.

Affiliate marketing though isn’t a pyramid scheme or MLM (multi-level marketing) either. With affiliate marketing you only get paid when you successfully refer a sale online. So for the business or product owner, it’s a useful business model in which performance related pay works extremely well. It’s far cheaper than advertising in many cases for the business owner. For affiliates it’s a good business model too when the affiliate starts earning. It means they can work from anywhere and build profitable businesses without any products or services of their own to sell.

Is Affiliate Marketing A Pyramid Scheme?

With affiliate marketing you only get paid when you make a sale. Unless you manage this, you don’t earn a thing! Many affiliates struggle to make it work for them and therefore consider it a “scam”. For this reason it’s a good idea to get the right training and help if you’re considering building an affiliate business. The affiliate marketing failure rate is pretty high with over 90% of new affiliates giving up.

For the business owners (who own the products) it’s a great deal. Rather than pay continually for expensive advertising and marketing, they can pay the affiliate only when a sale is made! For this reason affiliate marketing will always be worth doing for some. For the affiliates themselves it can be a challenge to make any money. But for the few who refuse to give up there are great rewards.

Affiliate marketers who are successful can work from anywhere and earn a potentially unlimited income. By using websites and automated systems, sales can be generated worldwide on complete autopilot. This outcome is often touted by online guru’s trying to make sales of their courses! The ease of entry and promise of ease of earnings means many can become affiliates without huge investment. This, in part, can explain the high drop out rate of new affiliates trying to earn money online.

Is Affiliate Marketing Right For You?

In order to become successful as an affiliate, you need to have a strong desire to succeed. Affiliate marketing is not like a job where you earn a wage for showing up. Your income as an affiliate is performance related. At first, all affiliates start from earning nothing! Many quit when they don’t see any results. Those who persevere often have a strong reason for doing so and refuse to quit. If you’re not committed to the journey of continual learning and improvement within your affiliate business, it can be easier to drop out.

Affiliate marketing is definitely not easy. But once you start to earn with affiliate marketing, you can create a passive income. This can be done through automation and recurring income from subscription affiliate programs. Before this can happen though there’s usually a period of doubt, fear procrastination and uncertainty. Learning anything new can be daunting, and affiliate marketing is no exception. It can be useful to remind yourself of your long term goals for your affiliate business and your “why?” for building an affiliate business.

Ultimately an affiliate business can replace an existing income and this is many people’s reason for learning affiliate marketing. But this doesn’t happen overnight and successful affiliates have usually worked for many months or sometimes even years before they can be free of their jobs.

Affiliate Marketing Fast Track

The fast track route to earn with affiliate marketing is through using a high value product range and paid marketing. With paid marketing you can build a list of subscribers very quickly. Then, you can offer products and services to your subscribers. As your list grows in numbers, you’ll see more and more sales coming through if you do it right.

This requires investment of both time and money. To recoup your advertising expenditure, you’ll need a number of high ticket affiliate products to sell. Not all affiliate products pay out equally. Physical products for example usually pay between 1% and 11% commission. Digital products can pay a lot more – even up to 100% commission in some cases but more often between 30% and 40%. See affiliate marketing commission rates.

Affiliate Marketing Longer (But Cheaper) Route

The fast track route isn’t right for every affiliate marketer. It’s the best option for someone who wants to quickly escape a career and can afford to spend on product ranges and paid advertising. There’s many ways to do affiliate marketing though. Some affiliates will choose a longer path which is slower but suits them better. Blogging and content creation is another option for affiliates. This can take a lot longer but is far cheaper. Bloggers create content (like this article) and build up an audience over time. From their websites they offer products and services and often they also build an email list too.

Over time and with consistent effort, content creators build a vast resource of online content. This acts as a “digital footprint” which brings in leads and sales from a website or landing page which they own. Although this is a much longer term strategy than building an email list with paid marketing, it suits many affiliates to go this route because they have the time but not necessarily the money to use paid marketing.

Is Affiliate Marketing A Pyramid Scheme?

A pyramid scheme often doesn’t have a legitimate product or service to offer. But rather it uses the idea of large amounts of income to entice people to join and promote a scheme which offers little value outside of this earning potential. So one way to spot a potential pyramid scheme is to ask about the product or service being offered. If the product is vague and little is offered outside of the promise of wealth, it’s a bit of a red flag!

Don’t confuse pyramid schemes with MLM either. MLM’s or multi level marketing businesses are often legitimate. With an MLM, your earning potential is increased by the ability to expand your influence through a team of other sales people. When your team make sales, you can earn a percentage of these sales because you have introduced the sales people.

There are many legitimate MLM businesses which aren’t pyramid schemes. Affiliate marketing though is different to MLM in that an affiliate usually works alone and promotes products online for a share of profit.

Some affiliate companies have successfully combined MLM with affiliate marketing. See SFM Digital Business system for more on this. See also is SFM a scam.