In a digital landscape of personalized, hyper-connected platforms, ecommerce brands have a powerful resource for driving sales through affiliate marketing. It’s the reason why more than 80% of brands have affiliate programs, particularly in the fashion, outdoors, and health-and-beauty sectors. But the similarities between affiliate and multilevel marketing can raise concerns about the risk of affiliate-marketing scams. For the vast majority of cases, that concern is unwarranted. Discover the differences between multilevel and affiliate marketing, and learn how to unlock the full potential of the latter in a legitimate way.
What Is Affiliate Marketing?
Affiliate marketing precedes the digital era, but it has reached unprecedented heights in tandem with ecommerce, email marketing, and social media. The affiliate-marketing industry is now worth some $8.2 billion and drives a staggering 15% of e-Commerce revenue.
The essence of affiliate marketing is that brands pay third-party publishers a commission or fee to generate traffic or leads. The publisher, which could be a lone blogger or a sophisticated content creator with multiple networks, drives traffic to the brand’s platform and collects a commission for all sales originating from their affiliate links. The brand thus outsources much of the cost and time associated with sales. That might mean sacrificing creative control over messaging, but the advantage is lower-cost advertising through a trusted and authoritative source.
Affiliate marketing is big, legitimate business. It’s the marketing model that has delivered continued success for Amazon, Etsy, eBay, and more. And it’s not just marketplaces. Uber spent $150 million a year on affiliate marketing. Each of these businesses relies on YouTubers, bloggers, and online reviewers to build audiences and direct traffic to their product listings.
What Is Multilevel Marketing?
The key distinction between affiliate and multilevel marketing is that in the latter, publishers mostly generate revenue by recruiting members. If that’s the sole source of revenue — in other words, a pyramid scheme — then it’s usually illegal.
The Key Differences Between Affiliate and Multilevel Marketing
|Free to get started||High start-up costs|
|Publishers simply create content||Publishers buy a kit to sell products|
|Free to choose what products to promote||Network dictates which products to sell|
|Earnings by commission||May have to reach a threshold to earn|
|Brand sales team closes the deal||Publisher may have to close sale to earn|
|Revenue generated through sales commission||
Bulk of earnings through recruiting members
If your brand is incentivizing third-party publishers to promote your product or service in return for sales commissions, you’re involved in legitimate affiliate marketing. If you’re charging publishers for membership to your sales operation, that’s multilevel marketing, and it could be illegal.
How Can You Tell If A Program Is Legitimate?
Affiliate marketing content should be marked as such. That’s a Federal Trade Commission requirement for any online endorsement. Blog posts or videos should disclose the presence of affiliate links, be labeled as a sponsored post, and include a disclaimer that the publisher is earning a commission on sales.
None of these should be treated as a red flag, however. You’ll see sponsored content sitting alongside editorial on a wide selection of respected websites, and in many cases that content goes further in detail and authority simply because the blogger is a trusted expert in that niche.
On the other hand, the following may indicate that an affiliate-marketing program is not legitimate:
- A cost to join, such as taking a course, paying an admin fee, or attending a consultation
- Suspiciously high commissions, such as 50% compared to the typical 5% to 10% per sale for a legit affiliate
- Guaranteed profits; affiliate marketing is effective, but not a magic wand
- Sites with excessive ads or redirects, bloated copy stuffed with keywords, and low-quality images
- A lack of basic site and domain security, such as SSL encryption, contact details in the footer, and so on
- Lots of dollar bills on the screen, but generic product images that turn out to be stock images when subjected to a reverse photo search
As a rule of thumb, illegitimate affiliate-marketing publishers are high on hype and low on quality at first glance. Behind the scenes, many resort to cookie stuffing, bots, and click farms to maximize revenue before the curtain comes down.
Most affiliate links have a cookie life, so the affiliate will only earn sales within a predefined period. Legitimate affiliate marketers tackle that challenge with well-researched, informative content. Their illegitimate counterparts don’t have the resources, so they focus instead on urgency, hard-sell tactics, and back-end subterfuge.
How To Get the Most Out of Affiliate Marketing
Although it is practically free to get started with affiliate marketing, the key currency to scaling the program is trust. You have to promote products that you believe in and nurture an authentic connection with your audience. For content creators, that means working with a respected affiliate network and featuring products or services that resonate with your followers or audience.
For brands, it means developing a long-term strategy that incorporates other marketing channels, such as email, paid media, and social. With this in place, the challenge is to identify the right affiliate network to source the most effective affiliates in your sector. Not everyone is a good fit, and it’s important to collaborate with partners who can handle your brand purpose and guidelines with a sensitive touch.
Ultimately, e-Commerce brands should look for a qualified, experienced, and well-reviewed marketing partner to manage their affiliate marketing. Choosing Hawke Media delivered a 44.9% revenue increase for 360 Cookware.