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Is Affiliate Marketing a Pyramid Scheme?

When people hear the term affiliate marketing, they sometimes associate it with a pyramid scheme business structure.

While we can see both sides, we are here to debunk this myth and share our personal thoughts on this topic.

Before we get into the bulk of the blog, we first want to quickly go over what affiliate marketing is, what a pyramid scheme is, and compare the two to see how they are different.

Then, we’ll get into what you came here for – is affiliate marketing a pyramid scheme style business?

What is affiliate marketing?

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Affiliate marketing is when you create a relationship or a partnership with a company such as Amazon.

For example, you drive sales to their site through:

  • Your social media
  • Website
  • YouTube channel
  • or your blog.

You talk about the products you’ve bought, the products you use every day, and you give quick reviews of them.

Then, you link to these products, and when someone buys that product through your link, you get paid.

This type of career path has grown in popularity over the last couple of years, and it’s amazing to see how so many people can earn money while being in the comfort of their own home, or traveling the world.

As an affiliate marketer, you are essentially driving people to a website or company, encouraging and incentivizing them to buy something (through your link), and creating more sales for your partner in return for a small commission any time anyone purchases something through your link.

Sounds easy, right?

Once you build yourself a following and traction in your niche, creating an income as an affiliate marketer gets easier.

But leading up to that point, starting your career as an affiliate marketer isn’t easy.

You have to gain a loyal following that trusts your opinion, get them to actually purchase the things you are talking about, and keep them coming back for more.

Whether you are just starting on your journey to becoming an affiliate marketer, or you’ve been in the business for a while but you feel like you are hitting a plateau, we came up with our best tips for creating and growing a successful affiliate marketing business.

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Here’s what we came up with…

  • Create valuable content
  • Post consistently
  • Choose one niche
  • Be educational, not salesy
  • Create a blog
  • Create a YouTube channel
  • Be on as many social media platforms as possible
  • Engage with your followers
  • Create deep relationships with your followers
  • Use your data and analytics as feedback

What is a pyramid scheme?

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If you or someone you know is in the business where you work for a company and your one and only job is to sell products and recruit people to join your sales team, you are most likely involved in a multi-level marketing (MLM) business.

While everything seems fine and dandy and you are earning a lot of money, what you’re doing may be under an illegal business.

Let us set the record straight – not all MLMs are illegal pyramid schemes, but there are a lot out there that are.

A pyramid scheme is a form of a scam. The business seems real and legit, but behind the scenes, you are getting yourself into some trouble.

If you are involved in a pyramid scheme business, you can run into some pretty heavy costs on your part and anyone you recruit to join your ‘team’.

How a pyramid scheme works is someone reaches out to you and explains what they sell and how it can help you.

Once they have you buying from them, they’ll explain to you how you can join their sales team and earn money doing exactly what they do – and oftentimes, it’s a lot of money.

While this sounds amazing – who doesn’t want to work for themselves and earn a lot of money?

But the catch is that you only get paid on how many people you recruit not how much you sell.

Pyramid schemes are set up to get people to sign other people up, and the chain reaction goes on forever.

The more people you recruit, and the more people they recruit, the more money you earn – your product or service sales don’t matter.

Not sure how to tell if you’re in a pyramid scheme or not? Here’s what to look out for…

  • You’re not selling actual things – you’re main way to earn money is by recruiting more people
  • You’re promised that you’ll ‘get rich quick’
  • You can’t get real, written data about the company’s sales
  • Complex processes & pay structure
  • They only care about recruiting

If you’re working for yourself right now and you notice the bullets above are exactly what you do, silently take a step back and get yourself out – you have the potential to lose a lot of money, and we want to help you avoid that at all costs.

How are they different?

While some people think that affiliate marketing is just a newer name for a pyramid scheme, there isn’t truth to that.

We can see how people think that, but we are here to debunk that myth and show you how the two are vastly different from one another.

There are so many ways in which affiliate marketing and pyramid schemes are different. Here’s how:

Recruitment

This is the biggest difference when spotting affiliate marketing vs a pyramid scheme. In affiliate marketing, there is no recruiting – your business is you and you alone.

When you work as an affiliate marketer, you are working for yourself, by yourself, and you don’t need to add on anyone else to help run your business.

With a pyramid scheme, recruiting others to join you is the most important thing you’ll do and the only way to earn good money.

While the company may say that you are selling their products or services, you really are only earning money from recruiting other people to join your ‘team’.

Earnings

The pay structure for these two types of jobs is completely different. With affiliate marketing, you earn money on each sale made with your specific link.

You are driving traffic to certain websites, products, or services, and earning a commission fee based on that person’s total purchase amount.

On the other hand, the biggest way you earn money with a pyramid scheme is by recruiting others to join you.

Yes, you do earn a commission on any products or services you sell, but the big bucks come from adding on ‘team members’.

Job responsibilities

If you’re an affiliate marketing, your job is to educate people on the products you use and love.

Whether that be through YouTube, Instagram, Facebook, Twitter, or your blog, you want to push as much traffic to your partnering sites, encourage them to purchase through your link, and you earn a commission.

That’s it – educate and earn.

With a pyramid scheme, you do spend some time selling to potential customers, but once you have them purchasing from you, that’s where the real work begins.

Once you have someone buying from you, you then start to recruit them to work with you by showing them how much money you earn each month.

Then, once they join you, you encourage them to recruit other people they know.

Sales

When you work as an affiliate marketer, your sales are solely based on how much effort you put into your business.

If you are only posting one blog per month to your website, and you post on social media once a week, you aren’t going to make many sales because you are driving people to different sites.

Your sales are dependent on the amount of work you put into your business.

This is similar to a pyramid scheme, but instead of getting paid per sale made through your link, you get paid every time you recruit someone to join your ‘team’.

If you get 3 people to join your team each month, you get paid based on that. You also get paid on products and services sales, but the commission fee for that is far less than it is when you recruit people to join you.

Is affiliate marketing a legit business?

While some people are still skeptical about affiliate marketing as a career, it is a legit business.

Becoming an affiliate marketer is something YOU choose to do on your own – you aren’t coerced into it by someone trying to get you to join their team.

Your affiliate marketing business can be anything you want it to be, and the success of it depends on the work put into it.

If you post consistently about your favorite products and you gain your follower’s trust, you’ll be amazed at how much money you can make being an online affiliate marketer.

Affiliate marketing is a legit business, and if you can get over your fear of starting, you’ll be so confused why you didn’t start earlier!

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