Network marketing and affiliate marketing are the two most common structures in the nowadays so called work from home or online business opportunities. Some people associate both terms with mlm (multi level marketing.) Technically, there are differences betweent the two terms: Networking marketing resembles more like mlm (multi level marketing) versus affiliate marketing is more like commission based sales. It's true some affiliate companies also have layers, but most don't exceed more than five levels.



Online affiliate marketers get their commission on each transaction. Customers usually make one time purchase. Thus affiliate marketer has to sell in volumes to make a profit. The compensation plan in affiliate marketing is usually based upon some performance benchmarks. The requirements for the affiliates include making sales, getting click throughs and registrations. There is a set compensation contract between the affiliate and the marketer.

Network marketers earn a referral fee when they sign someone up to the sponsoring company. Sponsoring company may pay the network marketer from several to unlimited levels. However, the original agreement will outline the restrictions in the maximum amount of payment as well as the maximum number of levels the payout can reach. Agreement and contracts differ from one company to another. The compensation plan in network marketing is quite similar to affiliate marketing. Upline network marketers also earn a referral fee from his or her downlines when they sign their friends to join the network.

The main differences between affiliate marketing and network marketing are summarized below:

Layers: There are several layers or mountains of people and recruiters in a network marketing system. Each network marketer has two downlines. Then these two downlines have two downlines under them, and it can go on and on. Affiliate marketing compensation scheme does not involve layers of downlines, although some affiliate companies has one to five levels.

Effort: Affiliate marketers have to put in continuous effort to produce desired income. Network marketing usually requires more efforts initially, and one can build residual incomes from the network of the recruits, and work less as time passes.

People skill: Network marketers succeed by recruiting people into the network and building downline; therefore they need to have strong interpersonal and recruiting skills. Affiliate marketing is more an individual effort through different attempts.

Repeated Sales: Network marketers usually sell consumable products that result in repeated sales. Affiliate marketers usually market products that are needed one time only.

Ease of selling: It is more difficult to sell in a network marketing system because the existence of many layers and recruiters trying to sell the same thing. And the supply is usually outweighs the demand. As the layers start to increase, sales would go to stagnation. Affiliate marketers can diversify the business by selling multiple products and companies at the same time; that reduces of the risk of doing business with only one company. Affiliate sales could be sluggish in the beginning, but it could take off exponentially as a matter of time.

Hopefully this article helps to clear the cloud for the terms "Affiliate marketing" and "Network marketing." There are people who are making a living doing either one or both at the same time. There is no way to get rich quick; one has to put in efforts to make things work. Above all one has to select a marketing company carefully and be sure to analyse all the compensation plans.