Affiliate Marketing vs Network Marketing: How To Choose One For Business
Affiliate marketing and network marketing (sometimes called MLM) are both business models you can use as a seller or promoter to generate revenue.
Network marketing is a broad and complex business model. And affiliate marketing is sort of an adjacent, but still different category.
In this tutorial, we want to cover real differences between these models when it comes to theory – but also touch on the practical nuances a little bit.
TL;DR: Affiliate marketing is a simpler model where partners refer customers and earn commissions on the sales they generate. Network marketing adds another layer, allowing partners to recruit other sellers and earn from a multi-level sales network.
Affiliate Marketing vs Network Marketing: The Essentials In Simple Words
In a typical affiliate program, a business would normally have such a simplified workflow: company, then affiliate partner, and finally a customer. So it is very simple. You, as a business, find promoters who find you customers. These promoters, in many cases, don’t buy anything from you, but they find you clients. For this, they earn a commission that you offer. Basically, they are paid a commission for their work. In simple words, the model here is: ‘Bring me customers and I’ll pay you’.
When we take a look at network marketing, which is also quite popular with specific types of businesses, you have a little bit more complex structure. A company still goes first, as with affiliate marketing. But then you have an unlimited number of so-called distributors: distributor A, B, C, and as many as you or your distributor/partner can recruit. Simply said, it’s ‘Sell my products, and you can also build a team of people who sell them’.
The commissions that you pay as a business to partners can vary based on the compensation model for your entire promotion tree, so that you can have many levels. These levels quite often include genealogy trees, so-called upline and downline categories or relationships, more advanced compensation plans, and even group volumes.
In both models, affiliate and network, you can have bonuses based on sales types.
These business models, affiliate marketing versus network marketing, require different recruitment workflows, different planning and models, different compensation models, and finally, different software or particular features in software. So as a business, you would want to decide on which model suits you before you start implementing software and models.
Affiliate Marketing vs Network Marketing: Recruiting And Team Growth
In network marketing, you recruit people, and they are actually part of your organization and sales pipelines. Well, in affiliate marketing, partners refer customers, but they mostly work independently and don’t belong to your organization.
| Network marketing | Affiliate marketing | |
| How do you grow? | Recruiting and selling | Customer referrals |
| Team | Very important / central | No |
| Earnings | Personal + team | Commission on sales they generate |
| Your relationship with seller | Distributor/representative | Independent person / blogger |
| Tools and software | Hierarchy – genealogy, ranks, compensation plans, commissions | Tracking links, attribution, commissions |
| For you? | If you want a sales force distributed | If you want to acquire customers through partners |
Let’s take real examples.
In network marketing, for example, with MONAT, a Market Partner can sell haircare products themselves and also recruit other Market Partners. They can then earn money from sales made by the people they managed to introduce to your network.
As for affiliates, there are many more examples of retailers and software businesses that use this model. For example, Amazon or Etsy.
A blogger creates a review of a product and includes an Amazon/Etsy/your site product affiliate link. Someone clicks it and buys, and your partner gets paid (fully automated with software like AffiliatePress). What’s important for our comparison – the blogger doesn’t recruit other Etsy/ Amazon affiliates, they bring you leads or actual purchases.
So how do you choose the right one for your business growth? A few simple ideas below.
Network marketing is okay if:
- Your circle is based on business relationships and that can lead to more sales and more active product promotion.
- You want to provide a more complex commission structure to all the branches of the business tree.
- You are fine with managing a hierarchy and business organization.
As for affiliate marketing, it is a simpler solution you may want to use when:
- You need help in finding new customers on new platforms and new circles.
- You sell online and want a fully trackable sales software, including purchases and signups.
- You feel better dealing with influencers, bloggers, partners, niche websites, publishers, advertisers, who know how to do their job and have their own audiences.
- You don’t need team relationships with salespeople involved.
Compensation & Income Differences
With affiliate marketing, your compensation plan is very simple. A sale earns a reward!
Network marketing, though, requires a more specific plan. You may reward your sales, your recruits’ sales; the size and performance your organization also play a role. So you’ll be working with different volumes and different models.
Let’s visualize some of the key differences in the table below:
| Affiliate marketing | Network marketing | |
| Incentive | Temporary reward | Motivation for both sales and team growth |
| Residual income | Sometimes for recurring commission | Common for a team network |
| Recurring income | Common with subscriptions/SaaS | From ongoing network sales |
| Override | Rare | Additional commission from downline |
| Rank | Rare (can be performance-based levels) | Yes – levels and criteria |
| Sales volume | The value/number of sales attributed to an affiliate | Yes – for commissions, bonuses, and rank |
| Payout | Payment to the affiliate | Based on personal or network earnings |
| Bonus | Different types (performance, program sign-up) | Matching, fast-start, leadership |
The standard affiliate functionality of AffiliatePress covers the simpler model (just affiliates) and the Multi-Level Commission functionality for networks (network structure and multi-level commissions).
Affiliate Marketing or Network Marketing? AffiliatePress Supports Both
If you are using AffiliatePress for your WordPress website, keep in mind that you can use both traditional affiliate marketing programs and also integrate a multi-level network.
So, if you just need an affiliate to share a referral link to your product, and then someone makes a purchase through that link, then all the fundamental functionality of AffiliatePress, with or without add-ons, is what you need. This is supported out of the box.
However, if at any moment you decide that a multi-level marketing (aka network marketing) is what you want to implement, it’s easy to do that with the ready-to-go multi-level commission extension built specifically for AffiliatePress.
With the add-on, AffiliatePress can deal with up to ten affiliate levels and lets you choose how commissions can be calculated.
So this perfectly resembles traditional network marketing. Your affiliates don’t just promote you, but they also help you grow the network itself. It’s a network of sellers.
The multi-level add-on comes with tools such as:
- network structure creation
- parent and sub-affiliate relationships
- network views
- invite links
- multi-level commissions.
Yes, you don’t need to search for any external software. Simply enable the multi-level solution, and your partners will be enabled to refer customers, recruit other affiliates, and earn commissions just within your network.
One of the most powerful tools of this add-on is that you can choose how the network grows:
- Unilevel is useful when you want a simple, flexible structure. An affiliate can recruit as many people as they want.
- Forced Matrix is for a controlled network. You can set limits, such as 3 direct affiliates and 5 levels deep.
You choose to decide on incentives, the shape of the network, and the distribution of commissions.
You can start with a straightforward affiliate program and then, if needed, get all the multi-level affiliate network tools built on top of it with AffiliatePress.
How To Find Customers?
What will you need to do to promote your products? Which promo paths are easier for you as a business?
Affiliate marketing usually turns existing audiences into a distribution channel. Network marketing turns people into both sellers and potential builders of a sales organization.
| Affiliate marketing | Network marketing | |
| Who promotes? | Affiliates, publishers, creators, influencers, websites, media | Distributors, representatives, independent sellers |
| Main relationship | Affiliates bring customers | Distributor to customer and distributor to new distributor |
| Promo types | Content, reviews, comparison articles, YouTube, social media, email, ads | Personal recommendations, social media, messaging, product demo, events |
| Offline selling | Rare | Active |
| Recruiting | No | Active |
At the end of the day, the promotion channels may even be identical for affiliate marketing vs network marketing. Both models actively rely on social media, content, email, influencers, recommendations, reviews, videos, and personal outreach.
Where is the difference then? Well, it’s in what your partners are building. In affiliate marketing, it is a channel to refer customers, and in network marketing, it’s also a network of other sellers.
Conclusions: Affiliate Marketing vs Network Marketing, What to Start?
Affiliate marketing is a good idea for those who are sure there are people who can efficiently introduce customers to the business (ecosystems of communities, bloggers, videos, etc.).
On the other hand, psychologically, network marketing requires people who are willing to build a sales organization around your products.
So, which one would you choose based on cost, specifics, and the business model you operate?
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