Affiliate Marketing Versus Network Marketing (MLM): Income formula Revealed!

Both affiliate marketing and network marketing pay people for referring a product or service. What then is the difference between affiliate marketing and network marketing?

The difference is best explained in terms of the way compensation is structured to pay for performance. Because of the many hybrid forms of compensation payments available now on the internet, to a newbie scouting for business opportunities, it is easy to get confused over the many terms and definitions used. In evaluating compensation plans, it is essential to understand the subtle difference between the two models. You want to find out?which model yields more income?

What is affiliate marketing? Affiliate marketing is usually done online. In its simplest form, affiliate marketers are compensated on a one time transaction only. Unlike products offered in a MLM business, affiliate products are often ones that a customer would only need to purchase one time. Thus, the more the affiliate marketer sell, the more they make. This is quite akin to direct sales albeit made via the internet.

Affiliate marketing has a compensation plan based on performance measures. For instance, if the affiliate marketer is successful in the form of sales, clicks, registrations, etc, he/she gets rewarded. The desired action as a means of compensation is already pre-agreed upon by the affiliate merchant and him/her.

In a short space of time, the affiliate marketing model has also evolved to a 2 level (or in some cases, up to 5 levels) compensation plan. In the popular 2-tier version, for instance, you (as an affiliate of a particular e-book merchant) will earn commission when you sell a book to person A and if person A signs up to be an affiliate and manages to sell to person A1, you get compensated too, in addition to person A.

Let's now go on to talk about what network marketing is. In the network marketing model, the compensation plan works in a similar fashion, except that compensation by the sponsoring company can be paid up to several, several or unlimited levels. The number of levels and restrictions in terms of payout is very much dependent on the arrangement offered. As arrangements can vary from one company to the next, this makes comparisons of the various compensation plans available out there difficult. So be sure to read all the fine print!

At any level, a network marketer has the potential to earn a direct referral fee for directly recommending someone and a leverage fee when one of his/her "downlines" is successful for referring friends to the same network. In the popular binary plan adopted by many network marketing companies, each person in the network has two "legs" or "downlines". If more people get referred to the network, they automatically go below the "legs".

Ongoing customer use is what creates the real residual income in network marketing. The MLM business can generate earnings for a very long time even after the initial years of hard work and investment. With a solid network, residual income is assured at each renewal period of a "downline". If the product or service involved in is one that has to be reordered at each renewal period, income should just keep coming in like clock work.

How does the difference in affiliate marketing and network marketing translate into in terms of building your customer relationships and your earnings power? In the network marketing model, to ensure that your "downlines" renew at each period, you must ensure that you build up a good relationship with them. It is essentially a people-build-people and a leader-build-leader business. The ability to generate huge sums of money is increased exponentially when the network grows. The potential to make huge sums of money is thus greater here if you can employ the efforts of others to help grow the business vis-à-vis the affiliate marketing model. In affiliate marketing, your earnings ability is limited by your own direct sales plus an additional of 1, 2 or up to 5 levels of leveraging efforts.

Having described the above, it would seem that to maximise your income, it is best to join online network marketing programs as opposed to affiliate programs.

Nope...I don't think that's really the case either.

Affiliate marketing is best described as an entry to online network marketing. Affiliate products are easier to sell, likely to involve one rather than an array of products and therefore, less expensive. For instance, an e-book is likely to have an associated affiliate program while access to a membership site of digital products is more likely to pay for recurrent renewals of membership.

In conclusion, there is always no harm in joining different programs whether affiliate or network marketing ones. Just be sure that you understand how you are paid and channel your efforts accordingly. Afterall, your goal is to build multiple sources of income. You have a choice to represent what or which combination of products/programs work best for yourself.

Evelyn Lim is an online business entrepreneur. She publishes a Free Weekly Newsletter "Mapping You to Success" for aspiring e-biz owners. The aim of her publication is to equip readers with the skills to acquire multiple sources of online income. To subscribe to her newsletter, visit http://www.e-BizMap.com

---

Google News Updated : Fri, 05 Sep 2008 14:05:39 GMT Haiti doubles hurricane death toll; US extends storm watches and ... - International Herald Tribune Boston Globe Haiti doubles hurricane death toll; US extends storm watches and ... International Herald Tribune - 51 minutes ago AP WILMINGTON, North Carolina: Tropical storm watches and warnings in the United States were extended from Georgia to areas just south of New York City on Friday as states along the Atlantic braced for Tropical Storm Hanna, which killed at least 137 ... Southeast states brace for Tropical Storm Hanna The Associated Press Hanna heads to Carolinas; Ike not far behind CNN International guardian.co.uk - StarNewsOnline.com - Greenville News - New York Times all 2,807 news articles Publ.Date : Fri, 05 Sep 2008 13:14:26 GMT Jobless rate soars to 6.1% - CNNMoney.com Macon Area Online Jobless rate soars to 6.1% CNNMoney.com - 59 minutes ago Unemployment surges to 5-year high as employers cut workers for eighth straight month, bringing '08 job losses to 605000. By Chris Isidore, CNNMoney. Unemployment Rate Hits 5-Year High As Economy Continues to Shed Jobs Wall Street Journal Unemployment Rate Rises to 6.1% New York Times TheStreet.com - Forex Pros - Reuters - RTT News all 36 news articles Publ.Date : Fri, 05 Sep 2008 13:05:45 GMT So What If Sarah Palin Used a Speechwriter? - FOXNews BBC News So What If Sarah Palin Used a Speechwriter? FOXNews - 1 hour ago By Betsy Newmark Disdaining Sarah Palin’s speech last night because she had a speechwriter is one of the lamest criticisms of her performance last night. Video: Inside the Tent: Reactions to Sarah Palin's speech Part 4 ReutersVideo Panel Reviews Palin, Previews McCain RealClearPolitics Baltimore Sun - Detroit Free Press - New York Times - Los Angeles Times all 4,224 news articles Publ.Date : Fri, 05 Sep 2008 13:03:46 GMT McCain honors NH soldier in convention speech - Boston Globe BBC News McCain honors NH soldier in convention speech Boston Globe - 1 hour ago ST. PAUL, Minn.—In his speech to the Republican National Convention, presidential candidate John McCain paid tribute to a New Hampshire soldier killed in Iraq. Video: "Change is coming," McCain tells convention - 05 Sept 2008 AlJazeeraEnglish US media mixed on McCain speech BBC News Marin Independent-Journal - Memphis Commercial Appeal - Today's TMJ4 - Detroit Free Press all 1,008 news articles Publ.Date : Fri, 05 Sep 2008 12:43:54 GMT Partisan Reception Greets Palin as VP Pick - ABC News CTV.ca Partisan Reception Greets Palin as VP Pick ABC News - 2 hours ago Sarah Palin is receiving a highly partisan reception on the national political stage, with significant public doubts about her readiness to serve as president, yet majority approval of both her selection by John McCain and her willingness to join the ... Video: Joe Biden On Palin's Speech CBS Obama Camp Turns to Clinton to Counter Palin New York Times Boston Globe - AFP - Evening Bulletin - USA Today all 1,899 news articles Publ.Date : Fri, 05 Sep 2008 11:18:50 GMT Thai PM buys time with referendum plan - Reuters BBC News Thai PM buys time with referendum plan Reuters - 4 hours ago By Darren Schuettler BANGKOK (Reuters) - Prime Minister Samak Sundaravej has bought some time with a referendum aimed at defusing street protests, but it will do nothing to resolve Thailand's fundamental political conflict, analysts say. Video: Locking horns over politics in Thailand -- 05 September 2008 AlJazeeraEnglish ANALYSIS: Thai demonstration raises democracy issues Monsters and Critics.com AFP - Times Online - Aljazeera.net - Inter Press Service all 3,754 news articles Publ.Date : Fri, 05 Sep 2008 09:33:48 GMT State falling way behind No Child Left Behind - San Francisco Chronicle Modesto Bee State falling way behind No Child Left Behind San Francisco Chronicle - 6 hours ago California schools, required by the federal No Child Left Behind Act to lift more students over a higher academic hurdle this year, instead stumbled and slipped back, as nearly 1400 fewer schools met test-score targets. Only 48% of California high schools meet federal standards, even ... Los Angeles Times Middle schools lead county's API scores The Salinas Californian Visalia Times-Delta - Record-Searchlight - Modesto Bee - Register Pajaronian all 106 news articles Publ.Date : Fri, 05 Sep 2008 07:41:11 GMT Affiliate Data Feeds Amazon RSS

PARLOT::Ebooks, Scripts, Websites, and more...

Adsense websites

Defining the Relations Between Blogs, E-zines, RSS, and E-mail

Although RSS and blogs are slowly reaching mainstream, they are... Read More

7 Simple Steps To Web Wealth

A lot of people and companies have websites. They also... Read More

Internet Secrets Revealed - Six Easy Steps to Build a Website to Success

Internet Secrets Revealed! Six Easy steps to build a website... Read More

The Right Internet Marketing Articles Strategy is a Game of Links

Do you know the secret or internet marketing strategy behind... Read More

Successful Marketing Using Websites and Why So Many Businesses Get It Wrong

Many great website concepts are developed, launched... and then flop!... Read More

The 13 Hidden Treasures of Internet Marketing

Most people get into internet marketing because it looks like... Read More

Be Different And Profit

I've just spent 3 hours surfing the web and found... Read More

8 Excellent Ways to Sell Your Back-end Products More Successfully!

A back-end product is a product that you attempt to... Read More

The Google Toolbar & Search Engine Optimization

Like many other useful toolbars out there so is the... Read More

Do You Even Realize What Youre Promoting?!

Now, I'm a firm believer in knowing what you're getting... Read More

Avoid Marketing Stagnation Using 3 Basic Methods

You joined an online marketing program, placed some ads, and... Read More

Advertising That Yields the Best Results

In today's world, online advertising is KEY to the success... Read More

At Last, A Plain English Guide to Internet Marketing

Have you ever been horrified and intimidated at the convoluted,... Read More

5 Fast Ways to Improve Your Website

Building a website is easy. Building a successful e-business is... Read More

How To Write Effective Safelist Headlines

Your headline is the gateway to your advertisement. It will... Read More

Build the Snowball and It Will Run

Setting up your own online business can seem extremely daunting.... Read More

Marketing Trends from the Digital Frontlines

The web and ways to market on the web continue... Read More

What Rich Internet Marketers Know That You Dont

Thirty years ago, I sold information via small classified ads... Read More

3 Highly Effective Strategies To Power Up Your Business in 2005

Whatever your business resolutions may be for this year, you... Read More

How Can You Can Go From Zero To Hero Overnight? Viral Marketing!

Everyone has heard about viral marketing but what is it... Read More

20 Amazing Ways To Jump Start Your Sales

1. Find a strategic business partner. Look for ones that... Read More

Seven Golden Rules Of Internet Marketing

"Do unto others as you would have them do unto... Read More

How to Set Up a 7 Day E-Course

Be a Winner! Answer the Challenge! An e-course is a... Read More

How To Come Up With New Product Ideas

Have you ever wanted to add new products to your... Read More

A Person Of Value

One of the "secrets" in Internet Marketing is knowing that... Read More