There is no shortage of misinformation about affiliate marketing, and believing it could easily cost you money. Here’s the truth behind some of the most common myths that are making the rounds.
Myth 1: Affiliate marketing is Multilevel marketing.
Not even close. It’s worth mentioning that network marketing (aka multilevel marketing) CAN be an honest, ethical business, but it tends not to perform well for entrepreneurs who buy into it. As a result, a handful of unscrupulous individuals who promote these business models try to conceal them by calling them “affiliate marketing.” Fortunately, there are some easy ways to tell them apart:
The Brand Overlord
Amway. MonaVie. Herbalife. Multilevel marketing ties you to one company, or even to only one product that the one company sells. And if the company collapses (as they often do), guess what: you’re out of work.
In true affiliate marketing, you are never tied to any brand. You are completely free to enter into affiliate agreements with any merchant on the planet that has decided to support an affiliate program. Not all of them will accept you, but many will, even when you’re just starting out.
Commissions are very different between these types of marketing, and in network/multilevel marketing, some of the payout systems are mind-bogglingly complex. MLM companies force you to share your commission with various people in your “upline” (who haven’t done anything to advance your business), and they promise you wealth beyond your wildest dreams from commissions earned by your “downline.” I think we all know where this kind of ‘model’ ends up.
In actual affiliate marketing, there is exactly one level: you, and the merchant whose affiliate program you’re part of. And the entire commission is yours, period. If you’re not sure about something that’s called affiliate marketing, this is the best smell-test you can use.
Myth 2: Affiliate marketing is complex.
Many of those marketing ‘gurus’ out there love to make this claim, because it makes it easier to sell their course or webinar, along with the attendant upsells. (Big surprise, right?) A few of these courses might even have useful information, but nothing that you truly need. The same goes for a number of software vendors who hawk expensive tools to solve all your problems as an affiliate. Again, some of them may be useful, but are far from necessary.
The reality is that the concept of affiliate marketing is about the simplest working business model in the world today. And there are really only two software tools you genuinely need: an email autoresponder for building trust in your audience, and a system for hosting the web pages that you use for capturing signups and doing ‘handshakes.’ Some marketers use a funnel building tool for that purpose; others use a web host and write the HTML themselves. There’s not much difference in cost between the two. True, there are plenty of other software products and subscriptions that can be helpful. They just aren’t necessary to keep your business going.
Myth 3: Affiliate marketing is passive income.
Many marketers who are actually honest will mistakenly use this term because it’s a cool marketing buzzword. Unfortunately, they’re not using it right.
In finance-speak, only two kinds of income exist: “earned income” and “passive income.” Any money you receive as a result of taking some action is earned income. That includes selling your time for a job that comes with a paycheck, along with income from a business you run, whether you’re the owner of a taco stand or the CEO of Apple.
True PASSIVE income, on the other hand, comes to you for no reason other than that you own a particular asset. This includes interest on a bank account, dividends from owning a stock, rent you collect from owning property, or royalties from owning the rights to a patent or a work of art.
So the bottom line is: there is no such thing as a business opportunity that provides passive income. Only certain kinds of investments can do that.
I apologize for not blowing anything up like the Mythbusters, but hopefully I was able to clear up some of your confusion.
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