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Digital/Web Is Affiliate Marketing The New MLM?

Discussion in 'Business Models, Niches, Industries' started by MarekvBeek, Apr 12, 2017.

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  1. MarekvBeek
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    MarekvBeek Do more Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    These days I find more and more people getting involved in affiliate marketing. And not just as a part of a business, but as their main business.

    Is it new?

    No. Affiliate marketing exicst since the dawn of wisdom. So it is nothing new.

    You send me a customer who pays, I send you a cut of the sale.

    That is nothing new.

    So why the comparison with MLM?

    Well I found that the focus of make money schemes are more and more switched from MLM to affiliate marketing.

    So what is the point?

    Affiliate marketing is a whole different soap opera then MLM. But the acts are the same.

    And you my dear, you relinquish control over an other entity.

    Isn't that what "fastlane" shouldn't be? Or should it?

    No, it shouldn't.

    So please folks, go create some freakin' products. SOLVE A NEED, and HELP OTHERS.

    If you don't, then don't bother asking me why "the company" changed its policies. They can, because they are in Control.

    And therefore, you should be in control.

    Happy hunting.
     
  2. RazorCut
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    MLM, by its very nature, means paying a high price for the product as you are paying a large chain of people commissions. With affiliate marketing there is usually a single commission, and if an agency is involved they will take a percentage of that commission for introducing the two parties to each other.

    I don't really see the connection apart from control. And when it comes to control you still have the same issue with creating and selling a physical product as most of the time people use a combination of ebay, Amazon and their own website to sell their wares. You therefore relinquish control to eBay and Amazon.

    This is also not a good place to be. I have in the past had a business that sold over $1M a year using a combination of ebay/Amazon and Website using FBA and shipping direct from our warehouse.

    Every 6 months we would have to jump through new hoops as new policies were introduced. Every year we would have to take a cut in profits as we were squeezed by both sales venues. Daily we would have to react to copycats, fakes and opportunists trying to muscle in on our products.

    As time went by wholesalers started selling in direct competition for a price we couldn't match and make a profit. So we ended up sourcing and manufacturing direct from India, Germany, the US and China. Then eBay and Amazon became swamped with Chinese sellers selling fakes and copycats. Then came competitors attaching directly to our Amazon listings selling a different product for a lower price. No problem you say. Report them to Amazon you say. Guess what? Months of reporting and still they do nothing.

    The point I am making is don't think that creating your own product gives you control. It does if you only sell through your own site. The problem is most physical products need ebay/Amazon to produce decent sales.

    When you go down that route you still LOSE CONTROL.
     
  3. TeveTorbes
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    Oook, but...I don't see the connection.

    MLMs are pyramids, affiliate marketing is sales. You can't be "duped" into sales unless you're paying for a course to learn it, which is something else entirely. Just because people you don't like are hyping it doesn't mean it's a scam.
     
  4. stefan
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    Check out Empire Flippers or a similar business listings site when you get a chance.

    There are TONS of affiliate websites that sell for six figures. Many are worth seven or even eight figures (bestproducts.com anyone?)

    It's one of many fastlane possibilities.
     
  5. Roli
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    True, and it wasn't till I read TMFL that I realised that.... However, as long as you realise this it's fine; and there are some superstar affiliate marketers out there doing very well. Are they fastlane? No, are they rich? Yes. Could it be ripped away from them with a simple rule change? Probably...

    Recently one of my old affiliate gigs paid out £10,000 in a single month (not typical), some of that money is being converted to product; ergo it can be a great route to fastlane.
     
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  6. Frankie Relax
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    Affiliate marketing not only doesn't give control, but it doesn't fulfill the entry commandment too. Simply anyone can join affiliate programs, most of them are completely free to join and requires a very simple registration progress. If the market is too crowded, an affiliate cannot make any money out of it.

    Also, an affiliate cannot earn more money than the company who offer the affiliate program. Never. It is not possible. The only nice thing about affiliate marketing is that it could easily scaled and generate some amount of passive income.
     
  7. Andy Black
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    I don't do "affiliate marketing" whatever that means, so take my comments with a pinch of salt.

    This reminds me of @Yoda's comment when people say blogging has a low barrier to entry. Sure, any man and his dog can *start*, but that means it's harder to rise above the noise and make it work. So that low barrier to entry ends up being a high barrier to entry into the successful club.

    I've no doubt there are smart business owners out there who use affiliate commissions to help them acquire email signups through paid channels so they're breakeven on the front of their funnel. If they make their profits on the backend then they potentially earn more than the owner of the affiliate product they were selling.

    If they can own the email address and can convert those initial buyers into repeat customers then they're a business imo.

    I'm sure those guys don't think of themselves as affiliate marketers, but as business owners and entrepreneurs.

    I have a client doing over €2 million annually who drop-ships some of the products he sells. He doesn't think of himself as a drop-shipper though. Drop-shipping is just a way HOW he's adding value to his market.

    I wonder sometimes whether we lose some clarity of purpose when we label what we do as anything other than building a business?
     
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  8. Sanj Modha
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    No, I don't think it is. I've done affiliate sales in the past and it was good money. The way I see it is I'm sending you leads in exchange for a fee. The quality of these leads depends on the traffic source/products. It's not different to services like Deliveroo or Hungry House sending customers to restaurants and takeouts in my opinion.

    I would never touch MLM, Empower Network, pyramid schemes etc.
     
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  9. MoreVolume
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    I hear you OP. I know a few people who tried affiliate marketing after failing at network marketing. Money chasers

    *Edit. I think that a few of you guys don't understand where the OP is coming from. He's not trying to compare the 2 "industries". He's pointing out that people of a certain mindset flock to Affiliate Marketing the same way they to flock to MLMs. They're both no-barrier-of-entry options for everymen that want to feel like they are "running a business".

    I have a cousin with a low IQ, felony and lifetime career at McDonalds. His first attempt at trying to make something of himself was doing network marketing. Of course he didn't make any money and he jumped around to a few different ones. The last time I spoke to him he was doing affiliate marketing.

    Affiliate marketing and MLMs are the main options for those who don't have the wherewithall to start a real business.
     
    Last edited: Apr 13, 2017
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  10. jpanarra
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    Yeah,

    I've been reading and lurking for a long time, I finally took action within the past year thanks to this forum and FLM. I've read inside and out about MLM and affiliates.

    MLM can be considered as 'scammy' because you are giving people fake promises of riches and success just to have them sell to more people, Once you build an 'army' of salesmen, you can sit back and just root them on without really investing in people and helping them. If you set up a MLM without a legit product it becomes a pyramid scheme and the FBI will break down your doors and drag you to prison.

    Whereas, affiliates are from people selling products and services. They're paying your affiliate to have an 'ad' in your blog which is no different than google making money from ads on their search engine. When it comes to affiliates it becomes all about your online 'location' and if you have prime blogs and internet 'real-estate' with high traffic ofc you're gonna make bank. However, the time invested and knowledge to build said site requires a high level of persistence and patience.

    Just my 2 cents...
     
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  11. Coalission
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    An affiliate's business is distribution, plain and simple. Anyone can throw up a Shopify store and buy some shitty products on Alibaba to dropship, so ecommerce violates the entry commandment too?

    The lack of control comes from the lack of talent and resourcefulness of the entrepreneur. Years ago when the real estate bubble was in its prime, people scrambled to get a real estate license, all if took was paying a few hundred dollars for a class and all of a sudden you could say you're "in real estate". 98% probably amounted to nothing. Is real estate a scam, or is it shitty wantrepreneurs who are always looking for the easiest path to wealth and when it doesn't work, they blame the business model or the industry instead of their shitty work ethic?

    That's incorrect and just goes to show how little people actually know about affiliate marketing. That's like saying Walmart could never earn more money than The Sponge Daddy. Walmart's business is distribution, an affiliate can make money from 20-30 different companies, while the company that offers the affiliate program can only make money from its own sales.

    This is coming from someone who has a few products, and also does affiliate marketing. Every business model comes with its own set of headaches and areas where you can "lack control" if that's the type of weak entrepreneur you are. All these all-stars yapping about control and "real" business and so on would collapse into the fetal position and cry the first time their merchant account shuts them down and hijacks their money for 3-6 months because they sold a little too much. "But but but, I thought this was a real business, I thought I had control".

    Pick the business you want to be in, and MAKE control. Every bottleneck, every single point of failure, attack it until it no longer exists. Or people can keep thumbing their noses at other business models while they squeak out a part-time income selling cheap Chinese goods through Shopify telling themselves they have a brand. Either way, it's all good.
     
    Last edited: Apr 13, 2017
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  12. MarekvBeek
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    Exactly. It is not that AM can be compared to MLM. It's the new money chaser scheme.

    However I love to use it to leverage my product. And yes, even if you are hitchhiking you can make tons of money.

    But you still let other people control over you.

    I found a guy who did well with AM. Now he's selling courses about how to do well with AM. And now he's doing even great. Why? Because he is now in control.

    And the people who follows his courses? Well some of them do okay, but most of them suck.

    He is making boatloads of money, and his 'soldiers' are just scraping by.

    What if the people created their own product, instead of promoting someone elses?
     
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  13. hughjasle
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    gonna echo what @Coalission said here

    As an affiliate I used to agree that affiliates have no control. That has completely changed. Now that I'm digging into amazon, ecommerce,importing, etc. I've found that being a GOOD affiliate has just as much control as anything else out there, and sometimes more! A true affiliate marketer can pick what product to sell and where to sell it. Are they leaving money on the table by not just creating their own products? sometimes, sure.

    Just like how sometimes if you built your own store from scratch it would pay off more than just "giving up control" to shopify to use their software.

    And BTW, in my personal experience, the affiliate always made more the the offer owner on a per sale basis. And they are ok with that because they know they aren't as good as the experienced marketers and a smaller slice of a bigger pie is bigger for them in the end than a large slice of a small pie.

    And as @Andy Black said above, it's all about the clarity of purpose. A true affiliate doesn't think of himself as someone else's sales guy. Just like a Google PPC Agency doesn't think of themselves as that. They both drive sales for who they chose. They are a machine at what they do and do a VERY good job and are in demand. Good affiliates are just good marketers who chose to give up the time/headache/backend set up/ etc. to sell a product vs doing it on their own. Sometimes its the smarter choice.

    Editing just to add that in terms of chasing the fastlane via a sellable asset, "being" an affilate that only does paid traffic and never building any kind of asset is just a high paying job/skill. Some still seek that route because you can make enough and retire off the massive earnings. The destination is the same, the path is just different. Just be wise in what you do with your own life.
     
    Last edited: Apr 14, 2017
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  14. MoreVolume
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    Really? A while ago I read a book that stated that lack of control comes when you dont control things such as your products, pricing, revenue model, organization and operational choices that caused lack of control.
    Can you explain how the intangibles that you named help you regain control?
    Please drop those gems my friend. You seem passionate about this

    Can you explain the bolded part? Im trying to understand how that makes any sense. Im sure you can go into detail, to clear things up.

    Also, you said a good affiliate has just as much control as "anything else out there". Anything else like what? If I produce, package, and ship my own products, how would you as an affiliate have more control than me, if you joined my program?

    You mentioned Amazon and I recently read that Amazon changed the payout percentage that affiliates get. How do you have control in that type of situation?
     
    Last edited: Apr 14, 2017
  15. hughjasle
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    i'll do that by answering your following questions
    In your example you own the product/package/ship and you outsource the marketing to an affiliate. From the affiliates perspective, they are just outsourcing you to produce, package and ship as well as risk the money in inventory. In this exchange you get sales for your product that you produced, and the affiliate gets paid a % of that sale for the campaign he built. Your control lies in that you can choose to cut the affiliate out, change the product etc. Indeed you have more choices/control in regards to your product. The marketers business isn't (shouldn't be at least) based solely on your product/business. You are just a cog in their wheel. Like any good business, having just one client can be devastating. The marketer's control lies in their ability to choose what to promote and how. If they aren't careful or smart and just have you as a client, they are at your mercy. Likewise, if you hire just one affiliate to run your product, you are at their mercy. These are simply just different sides of the same coin.
    I have never run Amazon as an affiliate as the payouts are too low for me doesn't suit my skills, but I can still answer this. This is exactly the same as the situation above. A GOOD marketer running affiliate offers is the same as any good business owner, or in your case, product producer. A product creator/producer is also at the mercy of amazon and them raising fee's if Amazon is their only source of income.

    I think there is a huge misconception thanks to fake gurus and people who believe what they are told about affiliate marketing. Many of the websites you guys visit and purchase from are simply affiliate marketing websites. Ever booked a flight online with a price comparison service? That's affiliate marketing done very right :D There's a right and wrong way to do any business.
     
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  16. Coalission
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    You keep thinking of "products" as the physical product that consumers buy, but the product for an affiliate, for a marketing agency, for a retail store, for a big box store, etc. is distribution. The ability to drive customers. The "customer" is the business offering their own product. An affiliate is in the B2B business, not B2C. What is the Achilles' Heel of any B2B business? Too few clients, or just ONE client.

    Once an affiliate realize he's a B2B business, not B2C, it all makes sense and they structure themselves accordingly. Network didn't pay you? A client didn't pay their invoice. Company shut down their affiliate program or lowered their commission to an unfavorable level? Client no longer needs our service, or is trying to renegotiate their dues. What do B2B companies do to avoid these things? Have more clients!

    Do you have more control than the retail store you get your products into? They have 100s or 1000s of products, if yours doesn't sell well, you're kicked off the shelf for someone else. What happens to YOU if your product doesn't sell? You're out of business.

    Like I mentioned before, for an affiliate their product is marketing, it just doesn't need to be physically packed up and shipped, but you will pay for the services nonetheless.

    By not having just one "client" named Amazon.
     
  17. MoreVolume
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    Your response didn't clarify sh*t bro.

    I actually see where you're coming from. Why I am still rolling my eyes, you are making sense. Keep doing your thing Broseph $
     
  18. MJ DeMarco
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    If you own an AM company that has 30 clients, 1 client debt, change of terms, etc, really doesn't do much damage.

    In effect, diversification of the skill is what reigns back control.

    The issue with IM (as with any business) is when you have just one client which pays the bills. This can be any business, specifically a business who only moves merchandise through 1 channel (Amazon, Walmart, etc.)

    Insofar as AM being the new MLM, only in that barriers to entry are extremely low and it attracts money-chasers who think the game is easy, with easy money. Rude awakening indeed.
     
  19. RazorCut
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    The title of this thread:

    Is Affiliate Marketing The New MLM?

    Does it actually matter what the latest fad is? It always changes but there will always be a 'newest game in town'. The latest gold rush.

    To qualify as 'new best thing' it needs a low barrier to entry, low startup cost, quick setup and low to moderate skill level requirement. What game that is, is then usually driven by media attention hyping up a select few. The pioneers who had the foresight to build a lucrative business on a new platform, or, with a new model, and were reaping the rewards from it.

    You then have the "money-chasers" as MJ calls them for whom their main method of research is reading the national newspaper and coming across an article about someone making $1M a year selling the second hand clothes on eBay they purchased from thrift stores. Or someone who self published a book on Amazon that gained traction or two brothers who created a quirky video that went viral on YouTube etc. etc.

    It's whatever the media spotlight focuses on. The clever people keep their heads down and duck when they see the light coming in hopes that it passes by without noticing them. Because they know once they garner attention the game is up and all the hard work they put in to create a profitable business will slowly go down the pan when everyone and his dog jumps on the bandwagon and ruins it. You will always have those that have a big enough following to shrug off the masses intent on taking a piece of their pie but it is never as much fun working in a crowded marketplace where you have idiots muddying the waters.

    I remember many years ago (when eBay was the big trend) reading on the Powersellers board of the frustration of one seller because he had a direct competitor appear from nowhere undercutting him to the point where he couldn't make a profit. It turns out the competitor was a retired guy working from his spare bedroom who wasn't interested in making a profit at all. He was selling at, or below, cost simply because he loved getting positive feedback. He was effectively working for little gold stars like he was in school. How do you compete with that mentality?

    Off the top of my head there has been MLM, eBay, eBooks, Affiliate Marketing, blogging, YouTube, Self-publishing and a boat load of others over the years.

    In my opinion the clever money is in providing the shovels for the latest gold rush. Companies providing statistical services for Instagram users, software solutions for creating webinars, automation software for your Twitter or Pinterest account, inventory software for handling your combined eBay/Amazon/Website sales. Look for what is destined to be the latest crowded marketplace and see what tools and implements they will need to make their life easier.
     
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    Powerful! As MJ mentioned in his book: Don't dig for gold, sell shovels.
     
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    Featured! Rep+
     
  22. RazorCut
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    Wow thanks MJ.
     
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    Not all MLMs are pyramids, just as not all Pyramids are MLMs.

    There are some legitimate MLM companies out there, such as Avon, Mary Kay, and Amway, which are viable options in creating a passive income. These also take years to build to create such an income, just like any other business. The difference between these companies and pyramids is the way that money is moved.

    In a pyramid, the members are told solely to go out and recruit other people, in which case they get paid based on recruitment which no sales are involved in any part of the process. The person buying into the business pay a sum (somewhere around $500-$2000) for the "privilege" of being part of the group, then those people are told to go out and recruit others. No products are sold, nothing is moved besides money, which in case makes it illegal.

    In MLMs such as the ones mentioned before, products are provided by said parent company (makeup, soaps, detergent, etc) for the distributor to sell for margin, in effect creating a base of income to buy higher product inventory for a growing customer base. These companies, because they do not directly hire employees, rely solely on the distributors to bring on a downline to sell the product as fellow distributors. These people in the downstream, in most cases, have the same amount of opportunity, if not more based on a number of factors to be just as good or better than the person who brought them into the company and make an even higher income based on their work ethic and how they grow their affiliate business.
     
  24. TeveTorbes
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    They are most certainly not.
    But they are a great way to sell well-intentioned yet uneducated people "the dream of entrepreneurship" while hawking overpriced junk for small splits and endless referrals. My wife and I call these companies body snatchers every time another friend of the family connects on Facebook just to pitch their spiel and invite us to a party. "Oh no, they got Andrea!"
    No, the money still moves from the bottom to the top because those at the top require it to make their money. It's built to be zero-sum. MLMs make salespeople, not products - there's no real outside source of revenue.
    Of course they do - and those are the only jobs I'd concede to be legitimate.
    The difference is, in an MLM, if one person makes a large return on their investment, it's at the expense of someone else - the only way to make money is to be upline. It's not about work ethic.

    Even if MLMs were somehow not garbage, you're still working for yourself and for someone else. There are infinitely better ways to hustle.
     
    MJ DeMarco and Ashhh like this.
  25. JayPrince
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    JayPrince New Contributor

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    Sounds like someone got sucked into an mlm earlier in life ;) but that is your opinion. There are people who make money doing such things, a banker can only make millions/billions at the expense of those who take out credit cards and drive themselves into great debt or take out a mortgage. Are those scams as well?
     
    ZF Lee likes this.