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One of the most frequently recurring confusions consists in equating Affiliate Marketing to Multi-Level Marketing. Some are being confused by two-tier affiliate payouts, while others just don’t care enough to study the differences. In reality, though, Affiliate Marketing and Multi-Level Marketing are very different.
If you’re more of a “visual” person, see my video answer below:
The fundamental difference between Multi-Level Marketing (or MLM) and Affiliate Marketing lies in how the money is being made by those who participate in these types of marketing.
In both cases we are talking about non-salaried workforce, but that’s the only similarity. The rest of the setup is, actually, so different that they aren’t even related.
In Multi-Level Marketing the workforce is encouraged “to recruit new distributors who are paid a percentage of their recruits’ sales” [source | italics mine]. In Affiliate Marketing, on the other hand, the marketer’s compensation is tied to their own sales performance. Do you get the difference? Affiliates aren’t paid based on how well their referral performs. They have a vested interest in sending you targeted users, as they are paid on performance basis.
The primary focus of an affiliate program is always on driving business to the company (often focusing on referring incremental sales), while the focus of an MLM scheme is primarily on keeping enlisting new salespeople. Affiliates focus on driving sales, leads, or other desired actions, while MLM marketers focus on building their network(s) of salespeople.
Now than you know the difference, don’t confuse the two, and educate others too!