Coming Soon: MLM / Affiliate Marketing Convergence? – By Debbi Ballard

by FeedFront Staff on June 28, 2009

There will be a convergence of two worlds, MLM and affiliate marketing. If you’re only in one world, you need to understand the other so you can get beyond the misconceptions and better compete.

Know that there are legitimate MLM (“network marketing”) companies. These differ from pyramids which are illegal.

When a firm pays new independent reps (or “networkers”) for sponsoring others into the program or mandates that new reps must each purchase a certain amount of product to receive the right to sponsor others into the opportunity, then the company can be vulnerable to pyramid challenges.

Most mainstream MLM companies do require the purchase of a start-up kit containing sales materials to become an approved independent rep.

To stay within legal parameters, MLM companies have extensive policies and procedures for their reps. In addition, they have compensation plans that, because of their tiered structures, have some complexities that have to be accurately explained.

Also, disclaimers and disclosures regarding the income opportunity and the products are needed.

That’s why mainstream MLM firms will have start-up kits whereby the reps are given information needed to help them operate their businesses within ethical and legal parameters. A manual is included along with brochures, business cards and other sales materials.

Note that reputable companies sell these kits at cost without any bonuses made to reps. This is done to avoid any possible legal challenges relating to monies being made purely for the act of recruiting.

From a marketing perspective, having a start-up kit also helps to screen reps from those who just impulsively sign up as opposed to those who show some real interest since there is this minimal purchase involved. (Many of the kits sell for $49 or less.)

MLM companies without start-up kits have a far greater number of people who sign up and never get active selling products as opposed to those mainstream firms that do require the purchase of a kit.

Affiliate marketers can relate to this. You know that since people can become affiliates for free, resulting in an overabundance of inactive affiliates in a given affiliate program.

Hence, how one enters an MLM program as opposed to an affiliate program differs. Agreements, along with the policies and procedures, are usually more stringent in the former.

If you participate in the upcoming convergence of MLM and affiliate marketing, you’ll want to utilize the best strategies and tactics to create a synergy between the two to expand your business.

This article serves as a start to a more vivid understanding of both worlds.

(This article is for informational purposes only and no legal advice is given as an experienced MLM attorney should be consulted for such matters.)

Debbi A. Ballard is a well known MLM consultant, expert witness, speaker and author who is educating people about the upcoming MLM and affiliate marketing convergence, and spearheading the development of MLM best practices at www.MLMconsultantsblog.com.

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  • http://www.AssociatePrograms.com Allan Gardyne

    Debbi, I hope you're wrong. I hope the "upcoming convergence" you predict is just wishful thinking.

    From what I've seen in more than a decade of affiliate marketing, multi-level marketing generally has a bad image online, quite a bit worse than affiliate marketing's image. I believe this is why MLM companies sometimes call their programs "affiliate programs" and use all sorts of imaginative descriptions of their compensation plans while avoiding using the words "multi-level marketing" or "MLM". They're trying to disguise what they really are.

    When I launched the AssociatePrograms.com affiliate directory in 1998, at first I included MLM companies. It was a mistake. I soon discovered that many affiliates don't want anything to do with MLM companies. Many affiliates took the time to email and congratulate me when I decided to dump MLM programs from the directory.

    Both industries include people who are sadly lacking in ethics. From what I seen while dealing with thousands of affiliates and merchants, the percentage of those lacking ethics is considerably higher in the MLM area.

    There's a big difference between the two industries. Any push for a melding is most likely to come from the MLM side. It's been rejected for more than a decade online. I fervently hope that state of affairs continues.

    If a major point of difference is that people have to pay to join an MLM company, that's just fine with me.

    My advice as an affiliate and affiliate merchant: With many thousands of affiliate programs to choose from, avoid any that asks you to pay to join. Affiliate merchants that do try asking for a joining fee usually disappear very quickly.

  • http://www.mlmconsultantsblog.com Debbi A. Ballard

    Chuck, so glad you will be attending my session in New York, Chuck. I'm really looking forward to meeting you. Yes, because the mlm network marketing industry has undergone so much legal scrutiny and challenges over many decades, there is much the affiliate marketing world can learn from what we experienced to avoid similar problems. That's why I invited Kevin Grimes, a leading mlm attorney, to join me at the session. He will be addressing some critical legal issues impacting both worlds. Kevin and I have both done volunteer work over the years to help educate people about ethical and legal issues so that their businesses, and the consumers they serve, are protected.