Is Affiliate Marketing a Pyramid Scheme?

Written by: Branka

Updated: January, 9, 2023

Posted in:

Is affiliate marketing a pyramid scheme? That’s a question that’s been on a lot of people’s minds lately and for good reason. After all, there are some major similarities between the two business models. But is there more to it than that? In this blog post, we’ll take a closer look at both affiliate marketing and pyramid schemes and see how they differ. 

By the end of it, you’ll be able to decide which one is right for you. So let’s get started!

Is Affiliate Marketing Legit?

First of all, let’s set the record straight and answer the question — is affiliate marketing legitimate? That is a resounding yes. It is a legal way to make money online and is often quite profitable. It is not a get-rich-quick scheme. Pyramid schemes, on the other hand, are illegal and can result in heavy fines and even jail time. 

Even if you are short on cash, it is possible to start affiliate marketing with no money.

Is Affiliate Marketing Better Than MlM?

Some people would say that affiliate marketing is better than multi-level marketing (MLM) because it doesn’t require as much investment or risk. You don’t have to buy products to sell, and you don’t have to carry inventory. 

Learn more: MLM Statistics

Others would argue that MLM is a better option because it offers the potential for a larger income. The difference between MLM and affiliate marketing is that with the former, you are able to build a team of people who will sell products for you, and you earn a commission on their sales.

The Difference Between Pyramid Schemes and Affiliate Marketing

The main difference between affiliate marketing and a pyramid scheme is that you don’t have to pay any money upfront as an affiliate. All you need is an internet connection and your own content platform (be it a website, social media page, or YouTube channel), and you can become a merchant’s affiliate just by selling their products or services.

There is no risk involved in this type of marketing, and you can actually make quite a bit of money if done correctly, so more often than not, affiliate marketing seems to be worth the try.

Then, when we compare pyramid scheme vs. affiliate marketing, with the latter, you are not required to recruit others. You can simply sell products through your website and earn commissions from the sales.

And why would you recruit competition anyway?

In a pyramid scheme, however, recruitment is essential for making any money. You will need to convince people to join under you so that you can earn a commission from their efforts. This can be quite difficult, and often leads to people losing money instead of making it.

How Is Affiliate Marketing Not a Pyramid Scheme?

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. Participants can also make money through commission from sales of products or services they promote. In a pyramid scheme, participants only make money by recruiting new members. 

Pyramid schemes are illegal in many countries because they are unsustainable and often lead to fraud.

The Takeaway

While there are some similarities between affiliate marketing and a pyramid scheme at first glance, they are in fact quite different, since, unlike a pyramid scheme, affiliate marketing is a legitimate business model that can be very profitable for both merchants and affiliates.  So, is affiliate marketing a pyramid scheme? No, it is a legitimate way to earn income from online marketing efforts.