Do a Pyramid Scheme and Affiliate Marketing work exactly in the same way? Or is there a difference between a pyramid scheme and affiliate marketing?
If a business model does not work, then people call it a scam, a Ponzi scheme, or a pyramid scheme.
In some cases, people are justified in calling it so.
Such cases are when they invested their hard-earned money, only to learn that the operation has shut down, or that they have been given excuse after excuse and realize that it was too good to be true.
In other cases, people are not justified in labeling it a scam or pyramid scheme. They just did not follow through with the training and gave up too soon to see any real results.
Does affiliate marketing fall in the category of scams or not?
What is The Difference Between a Pyramid Scheme and Affiliate Marketing?
A pyramid scheme is a business model that recruits members into an organization where the members are promised a return on their investment by recruiting new members to the organization.
Affiliate marketing is a legit business model. The focus is NOT on recruiting. Instead, affiliate marketers get a commission for a successful business transaction that takes place between a buyer and a seller.
Affiliate marketing is more of a performance-based business model. You have to work at promoting products. A pyramid scheme gives its members a “lazy” or “easy” approach to making money.
Let me show you some more differences between affiliate marketing and a Pyramid scheme.
Recommended Reading: Can You Do Affiliate Marketing Without a Following?
What is a Pyramid Scheme?
They do not have any physical products that you can sell and earn retail profits from.
Instead, the compensation plan is “very simple.”
You pay a fee to become a member of the organization or team. Then you are required to go out and recruit your family and friends to join the business.
When they join the team, you earn a commission from their payment. And so the cycle goes on and on.
Pyramid schemes can run for many years. In fact, when the members start getting commissions, it actually looks like a legit business as folks start to post their earnings.
As you can see that there is only ONE source of revenue coming in–via the MEMBERSHIP packages.
If members should stop joining, the money stops coming in, and eventually, the scheme collapses.
The Danger: is when the owners of the scheme decide to pull the plug at ANY time. When this happens, the newer members will lose out the most.
Here are some of the signs to watch out for in a typical pyramid scheme:
- No real owner
- Fake business address
- The promise of high returns
- Expensive membership packages
What is Affiliate Marketing?
Affiliate marketing is a performance-based business model. You are the affiliate marketer. The other two parties are the vendor(or affiliate merchant) and the customer.
You will be promoting products or services for the affiliate merchant or the seller. When a customer or buyer buys that product, you get a commission from the seller.
Why Do People Call Affiliate Marketing a Scam?
Most of the time it’s because people do not give it a FAIR chance to work. With affiliate marketing, you have to choose the direction you want to go with your business.
You can do it via a website, using social media, e-mail marketing, or even do paid advertising.
Whichever method you choose, you need to give it time.
It’s like building a REAL business. Success will not happen overnight, and many folks give up too early.
It’s sad to see this.
The truth is that now is a great time to start an online affiliate marketing business. Many people are shifting to online shopping. You have more than 5.5 billion people visiting Google every single day!
More and more merchants have affiliate programs. Amazon, Walmart, Airbnb, Tesla, and tons more!
There are lots of opportunities.
You need to give it time to work.
Let’s summarise the main differences between a pyramid scheme and affiliate marketing
The Main Differences Between a Pyramid Scheme and Affiliate Marketing
There are NO PRODUCTS to sell in a pyramid scheme. You earn from selling membership packages.
With affiliate marketing, YOU DO NOT HAVE TO DO ANY RECRUITING to earn money.
In a pyramid scheme, you are RESTRICTED and have to obey the rules of the company. With affiliate marketing, you have FLEXIBILITY and have your own business.
A pyramid scheme is illegal. Affiliate marketing is a legit business.
Recommended Reading: Can International Students Do Affiliate Marketing In Canada?
Conclusion
Thanks for checking my post on the differences between affiliate marketing and a pyramid scheme. I hope that this article has helped you out.
I started affiliate marketing back in 2016. I come from the health field spending most of my time working as a pharmacist.
Unfortunately, my hearing health took a turn for the worse. This led me to eventually do online affiliate marketing. You could say that it was a blessing in disguise.
Anyway, if you would like some free training and learn how to get started with your own online business, then simply click on the link that follows to get started.
FREE 4-STEP “CHEAT SHEET” :
Want To Build a PROFITABLE Online Business(but don’t know where to start?)
It was awesome to chat with you today.
See you next time.
Regards