If you’re looking for affiliate marketing vs pyramid scheme, you’re probably wondering whether affiliate marketing is a pyramid scheme or not? Rest assured that affiliate marketing is definitely not the same as a pyramid scheme. With a pyramid scheme, you’re encouraged to involve other people with the reward of earnings for doing so. So, in some ways there are similarities. But this is where the similarity ends.
Wikipedia defines pyramid schemes as the following: “A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.”
With affiliate marketing, you refer customers to products and services of some kind. Affiliates are third party referrers who benefit from the sale of other people’s products, mostly online.
Affiliate Marketing Vs Pyramid Scheme
A pyramid scheme is notable by lacking a trade of value of any kind. Most pyramid schemes entice people to join into a system where introducing new members results in payment. You can also earn from the recruitment of members further down the pyramid, so the more people you recruit, and the more they recruit, the more you get paid! If there’s no value other than the idea of financial reward, this is often a clue whether it is a pyramid scheme.
Pyramid schemes and multi level marketing businesses often get confused. A multi level marketing business rewards its sales people for building a team of sales people who are all selling products. If there’s no products, it’s more likely to be a pyramid scheme and less likely to be a legitimate business.
With affiliate marketing some affiliates will promote courses with a two tier commission structure. This encourages them to recruit more members because those members can add to their earnings with their sales. However, with a legitimate product, this is still legal and above board.
What Is Affiliate Marketing?
What is affiliate marketing? Affiliate marketing is a legitimate business model in which affiliates refer customers online to products and services. They don’t need to personally own those products themselves in order to benefit from their sale. Because affiliate marketing has such a low barrier to entry, there’s a lot of people who attempt it. This does make the affiliate marketing space very competitive. Many of those affiliates who attempt to make money from it fail. Around 95% of affiliates drop out which means only a small percentage actually make it work for the over the longer term.
Affiliates use all kinds of methods to get their products in front of buying customers:
- PPC – pay per click advertising
- Blogging
- Video blogging
- SEO – search engine optimisation
- Email marketing
- Social media
- etc.
Although affiliates can use any advertising they want, most affiliates use online digital marketing strategies as apposed to traditional advertising methods.
To learn more about affiliate marketing access this free video series.