Multi-Level Marketing (MLM) affiliate marketing has long been a key strategy for businesses aiming to increase their sales through networks of affiliates. It operates on the principle that affiliates can not only earn commissions by selling a product but also by recruiting others into the network, allowing them to earn on multiple levels. This model, while often confused with traditional affiliate marketing, offers unique benefits to both businesses and their affiliates.
Affiliate marketing and multi-level marketing (MLM) are two popular business models for earning commissions, but they operate in fundamentally different ways. Affiliate marketing involves promoting products or services through unique links, earning a commission on each successful sale without the need to recruit others. In contrast, MLM relies on both selling products and building a network of recruits, where earnings come from personal sales and commissions from the downline. Unlike MLM, affiliate marketing does not require an upfront investment, making it a lower-risk option. Additionally, affiliate marketers have more flexibility since they can work with multiple companies, whereas MLM participants depend on a single company's success. While affiliate marketing is widely accepted in e-commerce, MLM is often criticized for its reliance on recruitment and high dropout rates.
So, in short, affiliate marketing vs MLM comes down to the fact that affiliate marketing focuses on earning through direct sales commissions, while MLM emphasizes both product sales and network building. The table below highlights the key differences between these two models.
| Criterion | Affiliate Marketing | MLM (Multi-Level Marketing) | Digital MLM |
|---|---|---|---|
| Core Concept | Promoting third-party products/services for a commission | Selling products/services and recruiting new members | Selling digital products and building a network of participants |
| Income Source | Commissions from sales via affiliate links | Product sales + bonuses from the downline | Sales of digital courses, subscriptions, crypto assets + network bonuses |
| Upfront Investment | No, participation is free | Often requires a starter package purchase | Often requires buying a digital product or investing |
| Recruitment Requirement | Not necessary, earnings come only from sales | Essential for income growth | Key element; larger networks lead to higher income |
| Payment Structure | Fixed or percentage-based commission | Multi-level, income depends on the downline | Multi-level, often using binary or matrix payout schemes |
| Risks | Low, as no financial investment is required | High, potential losses due to unsold products | Very high, many fraudulent schemes exist |
| Dependence on Company | Minimal, work with multiple affiliate programs | High, earnings depend on a specific MLM company | Very high, often exclusive to the company |
| Popularity & Trust | High, widely used in e-commerce | Often controversial | Highly dependent on the company, many scams |
| Example Companies | Amazon Associates, CJ Affiliate, ShareASale | Amway, Herbalife, Oriflame | Crowd1, iMarketing, Forsage |
MLM (Multi-Level Marketing) and network marketing are often used interchangeably, but there is a subtle difference. MLM specifically refers to a business model where participants earn commissions not only from their own sales but also from the sales made by the affiliates they recruit, creating multiple levels of income. Network marketing, on the other hand, is a broader term that encompasses any marketing strategy that relies on word-of-mouth promotion and building relationships, where individuals are rewarded for their efforts in growing a network. While MLM is a form of network marketing, not all network marketing businesses operate on the multi-level commission structure typical of MLM.
Scalable Income Potential
In MLM affiliate marketing, your income isn't limited to just the sales you make. You can earn passive income by growing your network and receiving commissions from sales generated by your recruits. This tiered earning structure is one of the main reasons people are drawn to MLM programs.
Leverage Your Network
MLM allows you to expand your business exponentially by recruiting others who share your interest in the product. This creates a snowball effect where your network grows as your recruits bring in more people.
Flexibility in Marketing
With MLM, you have more flexibility in your promotional efforts. As an affiliate, you can focus on marketing techniques you’re comfortable with, such as social media, content creation, or email marketing, all while benefiting from the sales and recruitment efforts of your downline.
The entire point of MLM is rewarding the upline of an affiliate that is making a sale.
So when we talk about affiliate levels in an MLM structure, we will be looking at the structure from the affiliate making the sale and upwards.
If we’ll start with Affiliate 12, we can see that :
Affiliate 10 is ONE level above Affiliate 12
Affiliate 8 is TWO levels above Affiliate 12.
In other words, Affiliate 10 is level ONE for affiliate 12 and Affiliate 8 is level TWO for Affiliate 12.
If we’ll start with Affiliate 11, we can see that:
Affiliate 8 is ONE level above Affiliate 11 .
In other words, Affiliate 8 is level ONE for Affiliate 11.
As you can see Affiliate 8 is both level ONE and level TWO because it depends on who are you relating him to.
Since we allow for up to 5 levels of an upline to gain commissions, based on the structure in the screenshot above, if Affiliate 12 makes a sale, the affiliates that could also be rewarded for his sale are:
Affiliate 10, Affiliate 8, Affiliate 6, Affiliate 4 & Affiliate 2.
Affiliate 1 cannot be rewarded for Affiliate 12’s sale because he is out of scope as he is 6 levels above Affiliate 12.
Read more about how to configure the same or similar MLM affiliate structure with Tracknow in our detailed article.
A common misconception is that MLM is akin to a pyramid scheme. While both involve recruitment, MLM networks are legal and legitimate if they focus on selling real products or services. In contrast, pyramid schemes often involve recruiting individuals to pay for the right to recruit others, without a tangible product being sold. Understanding this distinction is crucial for anyone considering an MLM venture.
Affiliate MLM marketing thrives across various industries, and selecting the right niche can greatly impact your success. While traditional sectors like health and wellness continue to perform well, there are also emerging opportunities in eCommerce, Forex, Crypto, and other innovative industries. Here are the list of the popular niches:
These niches are not only highly profitable but also offer ample opportunities for affiliates to build sustainable MLM businesses. Whether you are focusing on eCommerce, Forex, Crypto, or emerging sectors like iGaming and prop trading, the potential for success is significant if you choose the right niche for your audience.
The examples of affiliate programs integrated into MLM structures have helped the companies listed below achieve multi-million dollar profits, become leaders in their fields, and ensure the prosperity of their businesses. These MLM affiliate programs are powerful tools that have transformed the landscape of affiliate marketing and allowed businesses to scale rapidly while rewarding their partners generously.
These top MLM affiliate programs have not only driven success for the companies but have also created countless opportunities for affiliates to build their own businesses. Through innovative products, generous commissions, and strong support systems, these programs continue to lead the way in the MLM affiliate space, offering high earning potential and the ability to scale.
For businesses using multi-level marketing (MLM) systems, choosing the right CMS (content management system) with built-in or integratable MLM solutions is crucial. Many popular CMS platforms such as Magento, WordPress, Shopify, as well as specialized platforms, offer capabilities for integrating MLM systems, making network sales management more efficient and convenient.
Here are some popular CMS platforms that offer MLM solutions:
All of these CMS platforms support adding MLM functionality through modules and extensions, providing businesses with flexibility in network management, commission payments, and sales stimulation. The choice of the right CMS depends on the scale of the business, budget, and technical requirements, but all of these platforms provide the necessary tools for success in the multi-level marketing field.
Using third-party MLM plugins and extensions for various CMS platforms can come with several drawbacks. One major issue is that not all of these solutions offer reliable and ready-made integrations with affiliate software, which can lead to compatibility problems. Furthermore, the level of technical support provided by many of these plugins is often insufficient. Users may struggle to get fast and effective help when they encounter technical issues, which can disrupt business operations. In addition, the lack of customization options in some third-party solutions can limit the flexibility needed for unique business requirements. Security concerns also arise, as these plugins may not always meet the latest standards, leaving systems vulnerable to attacks. Finally, updates and maintenance are often irregular, which can result in outdated features and performance problems over time.
While MLM marketing offers many opportunities, managing a network of affiliates can become complex. This is where Tracknow comes in. Unlike third-party MLM plugins and extensions for CMS platforms, Tracknow provides a dedicated and robust solution specifically designed to handle the intricacies of MLM management. With the right software, you can efficiently manage your network, track performance in real-time, automate payouts, and ensure full transparency across all levels. Tracknow integrates seamlessly with affiliate systems, providing reliable support and customization options, unlike many CMS plugins that may lack such flexibility. Additionally, the software offers top-notch technical support, ensuring that any issues are resolved quickly, which is often a limitation with third-party CMS plugins. Overall, using specialized MLM affiliate software like Tracknow gives you greater control, security, and scalability compared to generic CMS modules and extensions. Read our special article about the affiliate software for MLM models.
The image below shows the main screen of the MLM dashboard implemented in Tracknow Affiliate Software.
If you need additional information on how to activate MLM and configure the necessary settings, you can find it in our manual here.
1. What is MLM affiliate marketing?
MLM affiliate marketing is a business model where affiliates earn commissions not only on their own sales but also on the sales made by affiliates they recruit into the network.
2. How is MLM different from traditional affiliate marketing?
Traditional affiliate marketing focuses solely on the affiliate's sales, whereas MLM allows you to earn commissions from your own sales as well as the sales made by your recruits.
3. Can MLM be a legitimate business model?
Yes, MLM can be a legitimate business model as long as it involves selling real products or services and complies with the relevant laws. Pyramid schemes, on the other hand, do not have a legitimate product and are illegal.
4. What affiliate software should I choose for MLM, and what should I pay attention to?
When selecting affiliate software for MLM, it’s crucial to prioritize ease of use, robust multi-tier tracking, real-time analytics, and seamless integration with your existing systems. Look for software that allows you to manage affiliate performance across various levels, track conversions, and handle commission payouts with precision. Moreover, make sure the software offers scalability to grow with your business. For a deeper dive into the features that set top MLM affiliate software apart, you can read our guide on MLM affiliate software for more details.
Vlad Soloviev
Business Development Manager
