Is Affiliate Marketing A Pyramid Scheme? 9 Important Facts to Know
If you’re looking to make money online, you may have heard about affiliate marketing and be wondering if it’s legit.
Is affiliate marketing a pyramid scheme? No, affiliate marketing is not a pyramid scheme. In fact, it’s quite the opposite.
In this post, you’ll discover:
- Some common myths about affiliate marketing
- How you can get started with affiliate marketing by creating your own website
Related Posts:
- Affiliate marketing alternatives
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- How many blog posts before traffic comes to your website?
What is affiliate marketing?
Affiliate marketing is the process of promoting a product or service via a piece of content, such as a blog post or video.
Using a unique affiliate link that is given to you by a brand, you get a commission when someone makes a purchase through your link as a result of your recommendation.
It’s a great way to make some extra money on the side without having to invest large amounts of time or money upfront like you would with other businesses.
Is affiliate marketing a pyramid scheme?
No, affiliate marketing is nothing like a pyramid scheme.
A pyramid scheme is an illegal business model where money is made on the basis of recruiting other people into the scheme. It’s dubbed a pyramid scheme due to the increasing number of investors at each level. The scheme is unsustainable as there comes a time when no new recruits can be made. Therefore, the pyramid collapses.
Pyramid schemes are illegal as money is brought into the company via the recruitment process of bringing people into the ‘business’ rather than selling a product or service.
Some famous examples of pyramid schemes include Burn Lounge and Holiday Magic.
In affiliate marketing, you’re promoting products and services that exist. Although some companies do provide a commission for bringing other affiliates into an affiliate program, it is a legitimate partnership whereby the affiliate doesn’t need to pay any money to the business.
Wait! Is affiliate marketing like MLM?
No. Affiliate marketing is not MLM. MLM stands for multilevel marketing which is very similar to pyramid schemes. In fact, some MLM’s have been found to be illegal pyramid schemes.
MLM’s work in selling products and services. However, distributors of these are encouraged to sign-up recruits. Usually, these products and services are only sold via a network of salespeople. Although, there may also be online stores too.
A good example of a MLM is Avon or The Body Shop. That means that distributors selling their products can also make money by recruiting other salespeople to sell them.
Affiliate Marketing FAQs
So, now you know that affiliate marketing isn’t a pyramid scheme or MLM, you may have some other questions. Here are a few common questions that pop up.
Is affiliate marketing easy?
No. Affiliate marketing is definitely not easy. Despite what the ‘gurus’ on YouTube will tell you, affiliate marketing isn’t an easy way to make money.
Why? Because you need to build an audience first. Sure, you could simply share your affiliate links with family and friends. However, this is only going to generate a small amount of cash.
If you want to be a successful affiliate marketer, you need to have a loyal audience that trusts your recommendations are genuine.
You can build an audience via blogging (your website) or social media. You don’t need to have a large audience to start making money. But, you need to provide some value to them first before you start sharing your affiliate links.
If all you are doing is simply sharing your affiliate links in articles or on social media, people are likely to become bored by your content very easily. I suggest sharing some informational content first and then sprinkling your affiliate content in between this. For example, I share a lot of informational content on this website – I also have some affiliate posts like 25 sites for feminine stock photos.
Is affiliate marketing illegal?
No. Affiliate marketing is not illegal. Many people make a full-time income via this type of marketing as it’s a good way to earn money without having to create a product or service yourself.
Is affiliate marketing a good side hustle?
Yes. Affiliate marketing can make a brilliant side hustle. If you start a blog or social media account, there are certain affiliate programs, such as Amazon Affiliates that you can sign up for without having a significant number of followers or views.
I personally recommend creating content in a specific niche and then finding affiliate programs in that niche that offer a good rate for commission.
Is there actually money in affiliate marketing?
Yes, you can make good money via affiliate marketing. All you really need to get started is a laptop and a good internet connection.
I suggest starting a blog if you want to do affiliate marketing as many bloggers make thousands of dollars per month from their websites. Affiliate marketing often makes up a large chunk of this money.
The great thing about also having your own website is that it’s digital real estate that you can sell later down the line. Selling a social media account is against most platforms’ terms of service, whereas you can legitimately sell a website for potentially thousands and thousands of dollars.
How to start affiliate marketing
Here is the best way to get started with affiliate marketing in 2023.
1. Choose your niche
A niche is the subject/topic that you’re going to create content about. Choosing one niche will make it much easier to build an audience and find affiliate programs. For example, if you choose the beauty niche, you could then recommend your favorite skincare and makeup products.
I have an article all about choosing a blog niche. Plus, if you’re searching for inspiration, take a look at all the different types of niches I’ve posted about.
2. Set up a website
The next step is to set up your own website. The great thing about having your own website is that you own 100% of it. This is an asset that you can sell – even if you end up making no money from it, you can still sell it as a starter website.
To build your own website, you need to use a platform like WordPress, a domain name, and hosting. I have a full tutorial on how to build a blog here.
3. Create informational and transactional content
Once you’ve got your website set up, it’s time to create content. Having both informational and transactional content on your website will help you to grow your traffic and make money.
Let’s look at the two types of content in more depth:
Informational content
Informational content aims to educate a reader about a specific topic – just like the post you’re reading now.
It may also be a guide or tutorial, teaching you how to reach a specific goal.
Transactional content
Transactional content aims to help the reader make a purchase. For example, a product review. The reader is potentially looking for information that will help them to make the best purchase for their needs.
Another type of transactional content is ‘best of’ articles which compare the best products within a specific category.
Within these types of posts, it’s a good idea to use affiliate links since the reader is likely to be aiming to make a purchase.
Now, some websites may only post transactional content, but this is quite a risky strategy since the Google algorithm has affected these types of websites in the past.
I recommend having both types of content on your website – you can then use your informational content to send people to your transactional posts (if the topics you’re writing about are closely related).
4. Grow your audience
There are varying ways to grow your audience.
Here are some things that will actively get people coming to your website:
- SEO
- Social Media
- Paid traffic/ads
The easiest way to get started as a beginner is SEO. Once you’ve learned the basics of search engine optimization, you can then begin to grow your social platforms and encourage people to visit your website.
Another way to grow your audience is via email marketing.
What is email marketing?
Email marketing is when you use email to promote your products or someone else’s products.
Some affiliate programs, such as Amazon, don’t allow you to use their affiliate links in emails. However, there are plenty of other affiliate programs that do.
Email is a great way to grow your income via affiliate marketing since you can easily target your audience with strategic content.
To begin getting people on your list, use a lead magnet – a free piece of content that someone receives in exchange for their email contact details.
How to find the right affiliate program to join
So, now you know the answer to ‘is affiliate marketing a pyramid scheme?’, and a little more about affiliate marketing and how to get started, you may be wondering how you find the right affiliate program to join.
Here are some ways to find the best affiliate programs for your niche.
Find the top products within your niche
What are the best products for sale within your niche?
Let’s say you’ve started a website within the travel niche. Make a list of all the things for sale within that niche.
For travel, you could promote:
- Vacation packages
- Flights
- Travel insurance
- Suitcases
- Travel fashion
- Travel gadgets
- Travel course/digital products
Now we’ve got a list, it’s time to search for affiliate programs. A quick Google of ‘travel affiliate program’ brings up some interesting results.
The site I’m interested in here is Travel Payouts since it’s a travel affiliate network, meaning it acts as a middleman between brands and publishers like yourself. In just a few clicks around the site, I can already see that this network works with some huge brands, including Booking.com and TripAdvisor.
If I had a website in the travel niche, I’d do a little more research on the company via Google to see what their affiliates are saying about them, but I’ve got a feeling this would be a good network to join.
Look at commission rates
Another thing to look at when searching for affiliate programs is the commission rate – the percentage that you’re being paid on each purchase.
Typical commission rates are somewhere around 10%. However, you’ll often find that they’re much higher for certain products/companies.
For example, some bloggers offer 40-50% commissions on their courses or digital products.
Each affiliate program will tell you the rate of commission you’re being paid.
You may also want to consider the price of the product or service you’re recommending. Naturally, you’ll make more money with a 10% commission of a $500 product than one that only costs $5.
Consider cookie duration
Cookie duration means how long the cookie will last from the time someone clicks through your affiliate link. So, if you join an affiliate program that has a cookie length of 30 days, that means if the person that clicks through your link purchases any time during that 30 days, you’ll still receive your commission.
The longer the cookie duration, the better it is for the affiliate as it means you’ll have longer for someone to make a purchase. Not everyone who clicks through your affiliate link will buy something immediately, especially if it’s a higher-priced product. Many internet users may take days, weeks, or even months before they make their final decision. So, in giving you longer cookie duration, you’ll still receive your commission for recommending the product or service they purchase.
To recap
Now we’ve explored the answer to ‘is affiliate marketing a pyramid scheme?’, and how to get started, I hope this gives you a clear overview that affiliate marketing is a great venture to start.
It is hard work, especially when you’re trying to grow your website but taking a small bit of action each day will soon mount up!
