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Difference Between Affiliate Marketing vs Network Marketing

It’s magical what marketing can do in the growth of a brand or business. Marketing, the process of getting consumers interested in a service or product includes all aspects of a business such as sales, product development, advertising and distribution methods. It informs, engages, sells, expands a business and enhances credibility. While it is an essential component of any business, determining the right marketing strategy is vital. A marketing method that may work for one business may not be suitable for another. Also, brands should embrace new marketing methods, while also using traditional methods such as print media. In this article, we will look at the difference between affiliate marketing and network marketing. 

What is Affiliate Marketing?

This is a sales model that uses affiliates to increase product or service awareness using online platforms and earn a commission from sales or leads made. It involves two main players:

  • Brands- These are companies that sell services or products. They can be subscription services, retail businesses, financial services, broadband, travel, e-commerce and gaming, just to name a few. 
  • Affiliates- These are the service or product marketers. They can be niche content sites, product review websites, bloggers, shopping sites, coupon, loyalty and mobile apps just to mention a few. 

Through affiliate marketing, affiliates can earn money without creating their products or services. To derive traffic and generate leads, affiliates can choose to use one or several social media platforms such as websites, Instagram, Emails, Twitter, Facebook and YouTube, just to mention a few. 

The commission rates vary based on the agreement between the two parties. However, common payment agreements are based on 

  • Pay Per Click basis- Using this strategy, the affiliate is paid a percentage of the amount at which a consumer has purchased a product or service. 
  • Pay Per Lead basis- This is a payment system based on the conversion of leads generated by the affiliate. 
  • Pay per sale basis- The affiliate is paid based on the number of consumers who click on the link provided hence increasing traffic to the merchant site. 

While affiliate marketing may seem like a walk in the part, it requires:

  • Product research as well as follower interests and web traffic patterns
  • Maintaining relationships with followers and people who make purchases using the affiliate link
  • Consistent engagement with a brand as well as its services and products
  • Consistent use of social media to get new leads

So, what are the benefits of affiliate marketing?

  • An affiliate only worries about the marketing aspect of a business
  • It has low risks since there are no joining costs
  • Affiliates earn passive income through the leads generated
  • It offers affiliates the flexibility of working from anywhere

Affiliate marketing also has disadvantages including:

  • Most affiliate programs have strict conditions on how affiliates should generate leads. While this protects the reputation of a brand, it can be limiting hence leading to fewer leads
  • It is susceptible to fraud
  • Affiliates have zero control over a brand’s fulfilment of a service or product
  • It is highly competitive since most affiliates promote similar products 

What is Network Marketing?

This is a business model based on person-to-person sales by a network of distributors. It entails systemic strategies including recruiting, lead generation and management. Instead of distributing the products to stores, these marketing methods relies on a network of distributors. This marketing strategy has been in existence since the 1930s. 

Types of network marketing include:

  • Single-Tier network marketing – This model uses affiliate marketing programs to sell products and services.  
  • Two -Tier network marketing- This model entails direct sales and sales referred by distributors or affiliates. 
  • Multi-level marketing- This is a distribution-based marketing network that uses two or more tiers. 

Companies start by recruiting people who are interested in their products. Instead of a commission-based model, the distributors are sold the products at a discounted price whereby they can sell it at a full market price. Distributors are also encouraged to recruit other new distributors, commonly referred to as downlines where they are offered a percentage for each sale made. The recruits can also recruit their new distributors, hence forming a network of distributors. 

Advantages of network marketing include:

  • It is cost-effective as no formal marketing infrastructure is required
  • It makes it easy to enter new markets
  • It is easy to sell new products

However, the marketing strategy has disadvantages including: 

  • For it to be effective, other marketing methods need to be incorporated. This may increase the marketing costs
  • It makes it difficult to forecast sales

Similarities between Affiliate marketing vs Network marketing

  • Both do not require complex marketing infrastructure 

Differences between Affiliate marketing vs Network marketing

Definition

Affiliate marketing refers to a sales model that uses affiliates to increase product or service awareness using online platforms and earn a commission from sales or leads made. On the other hand, network marketing refers to a business model based on person-to-person sales by a network of distributors. It entails systemic strategies including recruiting, lead generation and management. 

Compensation

While affiliate marketing compensates affiliates using cash payments, network marketers benefit by enjoying the sale of products at heavily discounted prices. 

Customer-referral platforms

Affiliate marketing uses digital platforms such as websites, Instagram, Emails, Twitter, Facebook and YouTube to increase leads. On the other hand, network marketing uses business-based relationships to increase leads. 

Affiliate marketing vs Network marketing: Comparison Table

Summary of Affiliate marketing vs Network marketing

Affiliate marketing refers to a sales model that uses affiliates to increase product or service awareness using online platforms and earn a commission from sales or leads made. On the other hand, network marketing refers to a business model based on person-to-person sales by a network of distributors. It entails systemic strategies including recruiting, lead generation and management. Although both marketing methods do not require complex marketing infrastructure, affiliate marketing compensates affiliates using cash payments while network marketers benefit by enjoying the sale of products at heavily discounted prices.


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References :


[0]Evgenii Prussakov. Affiliate Program Management: An Hour a Day. John Wiley & Sons, 2011.https://books.google.co.ke/books?id=XbXIAgAAQBAJ&pg=RA1-PA8&dq=Difference+between+affiliate+marketing+vs+network+marketing&hl=en&sa=X&ved=2ahUKEwj7wYH7hpnuAhUxonEKHaOBDsIQ6AEwAHoECAIQAg#v=onepage&q=Difference%20between%20affiliate%20marketing%20vs%20network%20marketing&f=false

[1]V. C. Chandrasekharan. Network Marketing Is it for you?. Sterling Publishers Pvt. Ltd, 2008. https://books.google.co.ke/books?id=lIGHj6K6BygC&pg=PA12&dq=network+marketing&hl=en&sa=X&ved=2ahUKEwjcobilh5nuAhVKaRUIHYPWCAUQ6AEwAnoECAQQAg#v=onepage&q=network%20marketing&f=false

[2]Harris U. & Goldschmidt S. Strategic Affiliate Marketing. Edward Elgar Publishing, 2003.https://books.google.co.ke/books?id=1-bFs6jRwmQC&pg=PA46&dq=Difference+between+affiliate+marketing+vs+network+marketing&hl=en&sa=X&ved=2ahUKEwj7wYH7hpnuAhUxonEKHaOBDsIQ6AEwAnoECAMQAg#v=onepage&q=Difference%20between%20affiliate%20marketing%20vs%20network%20marketing&f=false

[3]Image credit: https://www.thebluediamondgallery.com/handwriting/images/affiliate-marketing.jpg

[4]Image credit: https://pixabay.com/photos/network-digital-marketing-release-4171795/

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