How many times have you heard or seen the question, “Is affiliate marketing a pyramid scheme?”
To be honest, I’ve heard this question asked, probably hundreds of times. And by thousands of people since I started writing my blog and making videos a few years ago.
In fact, it’s probably been asked thousands of times before that, too, because affiliate marketing has been around since the beginning of the worldwide web in 1994.
Therefore, making it one of the oldest forms of internet marketing available to us today.
The shortest answer to the question: “Is affiliate marketing a Pyramid Scheme?” is actually NO, it is not. They are two totally different ways of earning income. Affiliate marketing is a legitimate way of earning money. Pyramid Schemes are illegal. With the former, you earn money by promoting other people’s products. On the contrary, Pyramid Schemes have no products; one must only enroll people. Income, therefore, is scarce.
What is Affiliate Marketing?
There’s a growing trend these days of people looking to make money online through affiliate marketing.
So, we ask, what is affiliate marketing and how can you get started making money with it?
The definition of affiliate marketing according to Wikipedia is an Internet-based sales promotion in which a business rewards one or more affiliates for each visitor or customer brought by their promotional efforts.
Moreover, the merchant will pay you a commission when a customer purchases a product through your link.
For example, if you click on a promotional link from my site and then buy something from the merchant, I will get a small commission from them. It’s that simple.
Here is an infographic that depicts the affiliate marketing process:
Identifying An Illegal Pyramid Scheme.
Pyramid schemes are illegal businesses because they have no products and they rely on people building teams.
There is usually a large payment to join and monthly membership fees.
With pyramid schemes, you make money by bringing in new people who also pay to join.
The only people making money in a Pyramid Scheme are those at the top of the pyramid.
As new people join, their payments are used to pay commissions to those above them.
The more people you recruit and bring into a scheme, however, the more likely it is that the pyramid will eventually collapse.
This is largely because there are not enough people in the world to sustain it. See diagram below.
These kinds of businesses are exploitative and often target vulnerable populations who are looking for a way to get ahead.
People who run pyramid schemes usually have very grand promises.
An appealing backstory and an impressive-looking website full of stock photos.
But no real information about what their business is actually offering.
Pyramid Schemes are illegal – don’t be sucked in.
Important Differences Between Affiliates And Pyramids.
You Promote And Sell Actual Products.
The job of an affiliate marketer is to promote and sell an actual product on behalf of the affiliated merchant.
When a customer buys that product, the affiliate marketer gets paid.
In contrast, in a Pyramid Scheme, the main job of a member is to enroll other people below them on their “team”.
Supposedly, commission payments will be forthcoming to the member on new enrollees.
Although, as we have demonstrated above, in the long-term, Pyramid Schemes become unsustainable.
Affiliate Programs Are Free To Join.
It is easy and economical to start an affiliate marketing business because it is free to join affiliate programs.
Many merchants will also provide you with marketing and promotional materials and images for their products.
This enables the affiliate marketer to write good quality content to promote the product.
Conversely, there is usually a large “joining fee” to become a member of a Pyramid Scheme and a monthly payment to maintain your position in the hierarchy.
When you make payments, those above you in the pyramid receive commissions.
So, if you come across one of these, make a quick exit in the opposite direction!
Affiliate Marketing Is a Worldwide Phenomenon!
Many companies, such as Amazon, have an international presence. Therefore, as an Amazon Affiliate, you have worldwide online access to potential buyers.
Other companies that fall into this category are Apple and Target.
When you have an online business like affiliate marketing, you are not confined to a particular location to work.
Whereas, Pyramid Schemes are banned in most countries, including the United States, United Kingdom, Australia, New Zealand, South Africa, many European countries and even more.
Things To Think About.
There are some important things to consider before you start your own affiliate marketing business, and one of them is whether affiliate marketing is the right business for you.
If you have no idea what an affiliate marketer is or what earning money online actually means, then you should probably read our article on “What is online affiliate marketing?”
This will explain everything for you in great detail. You will learn about:
- Choosing your niche.
- Identifying a suitable domain name and building a website.
- Writing high quality content for your website.
- Joining Affiliate Programs and Networks.
- Where you can get training to assist you in building your online business.
Then you will be able to make a considered decision on whether this is the right pathway for you.
Final Thoughts On “Is Affiliate Marketing A Pyramid Scheme?”
You can make money as an Affiliate Marketer. The opportunities are endless.
As we have explained elsewhere, this can be quite profitable for you, but it requires that you build your reputation and trust with an audience so that they will buy from you.
There are a number of other opportunities available for you to make money online, such as writing and selling digital products like e-books, or setting up your own online store and dropshipping. This is a fairly competitive online space.
The best option for online entrepreneurs certainly seems to be building your own platform and promoting affiliate products through ads, affiliate programs and email marketing lists.
While it takes time and commitment to build your authority in the marketplace, you will benefit through passive income in the long-term.
You can build your online business to create a significant income and eventually ditch the day job! Whether you are working part-time or full-time, you can create a better income with affiliate marketing.
That’s why being your own boss is such a promising opportunity!
For more information on starting an affiliate marketing business, go here.