Is affiliate marketing a pyramid scheme?- Myth Buster

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Is affiliate marketing a pyramid scheme?- Myth Buster
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The alternatives to the traditional retail market among many are affiliate marketing and pyramid schemes but these are not the same thing.  Affiliate marketing is not a pyramid scheme at all, affiliate marketing is just another word for performance based marketing. you are only paid for action whether that be a sale, a lead, or an download.


Affiliate Marketing is a process of selling or endorsing a product in exchange for a portion of any sales that you generate. A company will typically give you a referral link, or some sort of unique identifier, to keep track of how many sales you have generated by referring a product to the customer. 


Affiliate marketing is basically you promoting a product or service. In exchange for a commission. With affiliate marketing programs like Clickfunnels can get 40% in recurring commissions. 

A pyramid scheme begins with a single business transaction between two people. An offer is then made that person 2 can make money selling this product as well. For all sales made by person 2, there will be a commission earned on the sale.


For each additional person that person 2 can get to sell a product or service, person 2 gets a percentage of all revenues they make as well. This creates a pyramid where there are different levels of supposed income potential.

Affiliate marketing works because the payment model is the same for everyone, or is usually based on an objective payment amount. Also, a pyramid scheme is considered illegal and will end up costing you a lot of money which you’ll never get back.

Related: Is Affiliate Marketing worth it 

What is Affiliate Marketing and Pyramid marketing

We first have to be clear on how a pyramid scheme works and how affiliate marketing works.

Pyramid marketing

The main characteristic of a pyramid scheme is that participants only make money by recruiting more members. There are many different kinds of pyramid schemes, but the two most basic are product-based and so-called naked pyramid schemes.

The payment structure is such that someone recruited later will never be able to earn any more than the person who recruited them.


Affiliate marketing


This is a performance-based marketing in which a business rewards their affiliates for helping to market the brand to drive traffic to their site, resulting in an actual purchase and increase in sale.

Affiliates earn a certain percentage out of the total expenditure of the customers they bring in.

You can think of affiliate marketing as a distributorship model where they allow distributors to represent their brand and market their products in exchange for commission. This results-based payment scheme is different from the recruitment based payout structure of pyramid marketing.

Affiliate marketing allows marketers to SCALE and their aim is for overall revenue profit, not just increase in people within the orgnisation. In short, no. Affiliate marketing is not the same as pyramid marketing.


Affiliates as users


In fact many companies act as affiliates for their vendors. For example, We use for design work  And we are an affiliate for them because with each new customer I refer to Canva, we get a kickback and my referee gets a cheaper rate, while Cavna profits from a new customer. Everyone wins and it’s sustainable too.

Secret of Affiliate Marketing

The secret to affiliate marketing is to teach people the secret to affiliate marketing.

Most affiliate marketing gurus are vacuuum salesmen who have graduated to a whole new level of thievery.

During the gold rush the people who sold shovels and Levi’s made all the money and affiliate marketing is the same.

Of course affiliate marketing is legal and legit; my beef is it attracts too many bottom feeders. People who make money selling people on how to make money!

I like to make a distinction between “opportunities” like Clickbank/JVZoo and Amazon. Digital products vs physical products.

Digital products are most times a treasure map to nowhere.

You would be using your time better to focus on becoming a Local SEO Web designer marketing expert.

Then you could use those skills in affiliate marketing later.

There will always be small businesses who needs your services for big bucks.

Affiliate marketing can be a dark hole and turn you into a self serving asshole. Human nature doesn’t fair well in that industry.

Watch every YouTube video on local SEO and a Google Maps you can and try not to bite the first hook you see in the water.

Watch 50 videos and you’ll know more than most “affiliate marketers” who are still searching for their gravy train.

Creating Residual(Passive) Income

In affiliate marketing, the primary way you make money is selling a product or service.

You refer people to the company and the company pays you based on the number of referrals or the sales from the people you referred.

For example, if you have a blog with a link to company’s product and that company pays you a commission for any sales that come from the link on your blog, then that’s affiliate marketing.

In a pyramid scheme, the primary way you make money is recruiting others.

You may make a little bit on sales of a product or service, but the real money is recruiting others to sell the product or service and for them to recruit others.

Usually, the pitch goes something like “If you recruit ten people and they each, in turn, recruit ten people, then you could make a lot of money!”


Affiliate marketing is a legitimate business model,

Affiliate marketing is a legitimate business model, not a pyramid scheme.

You can join a company as an affiliate and you will receive a commission (a percentage of the sale) every time a sale is made through your personal affiliate link.


For instance, Amazon works on this principle.There are many like share a sale and so on.


Affiliate is Make No Product but focus on Driving Traffic Business Model

My favourite thing about affiliate marketing is that you can get started right away.

It’s not like making software or anything else because the product is already made.

All you have to do now is drive traffic to your affiliate offers.

Not sure where to start with marketing your service-based business?

What you need is a simple marketing strategy and plan that focuses your attention on the right things and gives you the clarity and direction you need to grow your small business. That’s where I can help.

Contact  My Team to Explore how we can help you.

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Div Acharya
Div Acharya

Div, Founder, and Managing Director at DigitallyDiv strong believer and want nothing more than seeing you and your brand become amazingly victorious. With an MBA degree from Swinburne University Melbourne in tow and a great passion for digital marketing & Social Media Marketing, She is here to stay & grow!. She comes with a passion for helping people gain their confidence in Online Marketing.

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