As an affiliate marketer, I was asked by many people on several occasions the following question: “is affiliate marketing a pyramid scheme?” Since this question has come up too many times, I’m assuming that there is a big confusion on what exactly is affiliate marketing and that’s why I’ve decided to write this short article to clear the air once and for ALL. Before I talk about affiliate marketing, I think it’s important that I explain what a pyramid scheme is first…
What is a Pyramid Scheme?
A pyramid scheme is an offline and online marketing scam that starts from a single person or group in the top and continues to grow downwards like a triangle shape until it reaches the bottom and collapses. The higher the people are in the hierarchy, the more money they make and so obviously, the one who launches this marketing scam is the real winner.
So how does a pyramid scheme exactly work? A person joins company X by purchasing their products and selling it to others for a profit. Company X advises this person to recruit more people to join and in exchange, company X will give him/her a commission for each person he/she recruits plus part of their future earnings. The issue here is that most of the beginners who join these companies don’t have any real marketing experience and can’t make a SINGLE SALE. Therefore, these beginners lose out on their investments and try to make up for their losses by recruiting more people into the company. I also want to add that most of the products/services sold by these companies are pure JUNK and have no demand in the market. That’s why most people struggle to sell them and end up taking the easier route which is selling a fake entrepreneurial dream to the gullible ones. Network Marketing and Multi-Level Marketing (MLM) are two popular business models that fall under the pyramid scheme umbrella.
What is Affiliate Marketing?
Affiliate marketing is an internet based marketing concept where the person joins companies for free to promote their products/services in exchange for commissions. Many well-known and reputable companies have affiliate programs available to the public on their websites and anyone can sign up. Usually, the major requirements to get approved is owning at least one website and having some type of online marketing experience. Once an affiliate is approved, he/she can login to the dashboard and generate a URL link that contains a unique affiliate ID code. This is the link that affiliates use to promote the companies’ offers and if a customer clicks on this link and makes a purchase, the affiliate earns a commission for that sale. There are also other types of affiliate marketing programs and networks that have different payout models which is discussed more in-depth on the types of affiliate marketing programs page >>>
So now after I have defined the two marketing concepts above…is affiliate marketing a pyramid scheme? The obvious answer is NO! Unlike a pyramid scheme, NO recruitment or registration fees are required to be an affiliate marketer. Furthermore, it’s IMPOSSIBLE for it to be a scam when almost all well known and reputable corporations offer an affiliate program like Amazon, Wal-Mart, Target, Best Buy, Alibaba, GoDaddy, etc.
Why Would Someone Consider Affiliate Marketing as a Pyramid Scheme?
This is actually a pretty good question and a valid one too…From my personal experience as an affiliate, I believe there is ONE big factor that plays a major role in destroying the reputation of affiliate marketing. Did you ever see advertisements on Facebook or YouTube of young rich guys who are living the “HIGH LIFE” and offer to share how they make $10,000 per month on the internet? These SCUMBAGS are the #1 reason of why people think affiliate marketing is a scam. Some of those so called “gurus” would claim that they’re selling a HIGH QUALITY affiliate marketing training and once you join, you’ll discover that it’s just another high ticket MLM scam and they expect you to invest all your money into the program This of course doesn’t apply to all affiliate marketing courses available out there but a good example of what I’m talking about is the highly rated training that was all over the internet a couple of years ago: MOBE affiliate marketing training. Another category of scammers are those “affiliate marketing gurus” that sell you a training that promises to change your life and once you buy and apply their courses, the only REAL change you’ll have in life is an empty wallet and a maxed out credit card. A good example for this category is John Crestani and Dan Lok. That’s why I recommend beginners to block their eyes and ears when they come across these fake gurus online and to dedicate a good amount of time for learning the main concepts of affiliate marketing using free resources online like blogs, forums, YouTube, etc. You can also buy affordable courses that will enhance your skills in paid advertising and digital marketing (which is very important for all online marketers) such as Google Ads, Facebook Ads, SEO, Social Media Marketing, etc. If you’re planning to start affiliate marketing, you need to understand that it requires hard work and patience because it doesn’t happen over-night as some gurus claim. if you truly want to learn affiliate marketing the right way then follow my absolutely FREE 7 step Affiliate Marketing 101 Guide!