What's the difference between Internet MLM and affiliate programs?

First, let's take a quick look at what is affiliate marketing ...

Affiliate marketing is essentially the selling of someone else's products. All you need is to market other people's products and get paid a commission.

The concept started on the Internet for more than 10 years as at the time of writing. It is generally accepted that it began with Amazon as it recruited affiliates to help market its books and other products. For each sale, Amazon would pay a certain percentage of the selling price.

It also can be regarded as a branch of Internet marketing where products are marketed using the Internet as a medium. This contrasts with information marketing where you market your own product.

Whenever we discuss affiliate marketing, Clickbank, an affiliate program provider, will usually come to mind.

Clickbank specializes in digital products with tens of thousands of affiliate merchants (meaning product owners) and affiliate marketers (those who market the affiliate merchant products).

Becoming an affiliate with Clickbank is straightforward. Simply head over to http://www.clickbank.com and sign up for a free account. After that, click on 'Marketplace', type in some keywords, and off you go and create your own affiliate link.

The next thing to do is to promote your affiliate link through various methods of web advertising and traffic generation such as running classified ads, traffic exchanges, forum and blog marketing, social networking, etc.

When someone clicks on your link and purchases a product, you will earn your share of commissions.

Now, let's turn our attention to Internet MLM...

Internet MLM is merely a new generation of network marketing whereby the MLM company itself or network marketers make full use of the Internet to promote its MLM business opportunity.

Even today, some MLMs still operate very much in the high touch, traditional manner where you make a warm list of friends and associates, then contact and invite them for an appointment for a business meeting, either 1-on-1 or an opportunity meeting.

Once you sponsor someone, you will be paid a commission of the sales of the products/services consumed by the new person. Now, when this new person sponsors someone else, you will also continue to enjoy an overriding commission though this person is in your 2nd level.

When the new person in your 2nd level sponsor someone else, you continue to be paid an overriding commission. And this goes on for multiple levels (or even infinite levels in some compensation plans), thus the term multi level marketing.

In recent times, more and more MLMs and network marketers are beginning to use the high tech Internet to either generate leads for their MLM business and take them off line for a face to face meeting or attempt to run the entire MLM business operation - from prospecting, presenting, following up, closing, training - online. How successful this is remains to be seen as there will be a total loss of the high touch element that's so important in the success of a network marketing business.

Now, comes the interesting part: Affiliate Marketing vs Internet MLM

Affiiliate marketing usually operates by paying commission to the affiliate marketer who had directly caused the sale. If the new customer decides to become an affiliate marketer for the same product and let's say, he made 3 sales, the affiliate marketer who first sold to him will not be paid an overriding commission. This is single-tier affiliate marketing. Clickbank and many other affiliate program providers like PayDotCom pays only single tier.

However, there are some affiliate marketing programs that pay 2-tiers. In other words, if you're an affiliate marketer and you make a sale. When your new customer decides to turn affiliate marketer and makes a sale too, you get a cut. Isn't that nice?

Thus, I would arbitrarily classify affiliate programs as single or 2-tier marketing programs while Internet MLM as multi-tier affiliate programs. Theoretically, they are simply different flavors at opposite ends of the same continuum of marketing programs, known by different names.

Why not call Internet MLMs as multi-tier affiliate programs? Well, I guess you can. And what about calling affiliate programs as MLMs? I guess you definitely cannot if it's single-tier and you possibly can if they are two-tiers.

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