Is Affiliate Marketing A Pyramid Scheme?

By Strahinja | Tips

Jul 06
is affiliate marketing a pyramid scheme

Many people ask ‘Is Affiliate Marketing A Pyramid Scheme?’ They have seen their friends suffer under such scams and have not seen many affiliate success stories. Thus they jump to the conclusion that affiliate marketing is just the same as a pyramid scheme.

Their assumption would be in error as affiliate marketing is a legitimate business model where people can and do make money.

More...

What Is Affiliate Marketer

is affiliate marketing a pyramid scheme

In very basic and simple terms an affiliate marketer is merely a salesman representing a product owned by another individual or company. They help promote the product and earn a commission when their efforts are successful.

The affiliate marketer does earn a commission for their successful sales but they are given 100% of that commission and do not share any of it with their superiors. To help facilitate those sales, the affiliate marketer uses trackable links to make sure that they get credit for the purchase.

What Is Affiliate Marketing

Another way to look at it would be to see affiliate marketing as a real estate company. The owner of the home lists their property with the company and their agents do their best to sell that property.

is affiliate marketing a pyramid scheme

They do not own it, they do not use the property, they just represent the seller. The listing agreement is the trackable link in this scenario. Once the potential buyers agree to buy the property and pay for it, the real estate company gets paid.

That commission is not, nor any portion of it, kick backed to the seller in any way. 100% of the commission goes to the real estate company. That is the way it is in affiliate marketing.

The affiliate marketing company, usually just an individual, makes an agreement with the seller to represent their products at an agreed upon commission. When that product is sold through the affiliate marketing company’s efforts, then that company receives all of their commission.

Affiliate marketing follows tried and true business practices to make sure all their sales are legitimate.

What Is A Pyramid Scheme

A pyramid scheme also uses sales as the primary force to make money and drive their profits. The difference is that the salesman, the bottom of the pyramid, has to share their sales commission with his superiors.

pyramid

The pyramid salesmen usually goes out to demonstrate their product and they usually have to spend their own money to do that. There is little support for the lowly salesman and they have to work hard to generate good sales.

Unfortunately, they have to make a whole lot of sales to make a good living as each commission is not 100% theirs. Also, the pyramid salesman usually has to invest their own money to buy the products they represent.

This does not happen in affiliate marketing. The affiliate marketer does not have to purchase the product they represent and their investment may not be that costly. They can make more money with fewer sales and they do not have to spend their time or gas driving sales to their product’s owner.

Where Does The Money From The Sales Go

In affiliate marketing, the money from the sales go in two directions. The agreed upon commission goes to the affiliate marketer while the rest of the purchase price goes to the owner of the product. That is it.

suspicous

But in a pyramid scheme, there are many hands digging into the pie. The money does flow in one direction - up, but there are many stops it makes along the way. The money earned by the pyramid salesman does not stay with him or her.

Portions are paid all the way up the supervisory ladder till it eventually gets to the owner of the company.

How To Make Money In A Pyramid Scheme

As you have already seen, being the low man on the totem pole is not a fun place to be. Having to share your commissions with your bosses is not a good way to make money.

To make money in a pyramid scheme you have to place yourself at or as near the top of the pyramid as you can get. You do this by recruiting more salesmen to sell for you. In turn they need to recruit more salesmen and on it goes. Over the course of all their sales, you get a piece of their action.

recruit

The more people selling under you, the more money you make and the less you have to sell yourself. Remember, in a pyramid scheme, the money flows up.

To make money as an affiliate marketer, all you need is a commissions agreement, a website and a little time to write good content for that website. You also have to have good trackable links.

You do not need a supervisor or a supervisor’s supervisor and so on to do affiliate marketing. Your commission money stays with you and you alone. You are not supporting any higher ups through your sales work.

Affiliate Marketing Is Not Illegal

It is a viable and honest business model where people can make their own money through their own efforts. On the other hand, pyramid schemes are illegal in several countries due to the shady financial practices of those pyramid companies.

no sign

Some pyramid schemes may not have an actual product for their sales people to represent. Affiliate marketers do have actual products that they represent and the customer actually gets that product when they purchase it.

Some Final Words

It can be hard to separate the two business practices as there are some similarities between the two, But as you can see, there is nothing illegal about affiliate marketing unless you try to fake what you are doing and try to sell something you have no right to sell or does not exist.

BLOG POST

Affiliate marketing is an honest way to earn a living if you know how to do it correctly. And if you know how to write great content for your website.

Thank you for reading.

Strahinja

 

About the Author

Hi there. I'm just a regular guy that worked many different jobs before finding out about affiliate marketing. Decided to give it a try, followed the instructions, worked hard and started making money online. Here to help you achieve same thing. Working from home is possible if you have the proper training and people.

  • Kenny says:

    Thanks for clarifying the difference between a pyramid scheme and affiliate marketing. They really are very different, and affiliate marketing sounds a lot better.

  • Karen says:

    Thanks for this information on affiliate marketing. I’ve been looking into it and feel a lot more confident about it.

  • Bob says:

    Interesting article. I’ve been thinking about getting into affiliate marketing and your article persuaded me to give it a try.

    Do you recommend higher priced products or lower? Why?

    • Strahinja says:

      Thank you for the comment Bob.

      Sometimes it is better to go for higher priced product because it will bring more value, but it is not always the case.

      Even very high priced products can bring little value and are not worth the try.

      I recommend trying Wealthy Affiliate if you are interested in affilaite marketing.

      Have a nice day.

      Strahinja.

  • >

    Become an online entrepreneur: Join the community that already helped more than 1.5 million people create a career online.