Is Affiliate Marketing A Pyramid Scheme? FAQs Vs Fiction
No, affiliate marketing is not a pyramid scheme. In fact, it’s a perfectly legal and viable way to make money online.
Affiliate marketing has grown as a field over the last few years, but its rapid growth and the subsequent success of many participants has raised questions as to its authenticity. While the business model of affiliate marketing can be difficult to understand, rest assured knowing that affiliate marketing is not a pyramid scheme or another type of scam.
An affiliate marketing program is completely real and an honest way to make money online.
Is Affiliate Marketing Legit?
In short, yes, affiliate marketing is legit. While scammers do exist in every field, the practice of affiliate marketing is both legit and legal. Affiliate marketing is essentially a business partnering up with an individual.
For example, an individual (who typically has a larger following) posts some type of content discussing the product or service of a business. The business typically provides them with a special link to their affiliate marketing program, which consumers can click to get taken to the business’s website. If a consumer chooses to follow that link and purchases the product/service, the individual who posted the content will receive a commission off the sale.
Affiliate marketing allows a business to broaden the scope of its advertising methods, while also allowing individuals to generate a living off of commission.
Affiliate Marketing vs MLM vs Pyramid Schemes
Oftentimes, people mistake affiliate marketing for a pyramid scheme or multi-level marketing scheme, despite the fact they are all quite different. As outlined above, affiliate marketing allows a business to expand its marketing by offering a commission to individuals who choose to sign up for the program and discuss their products.
The biggest difference between affiliate marketing, a pyramid scheme, and multi-level marketing, is that the latter two involve heavy recruitment. With affiliate marketing, you can’t earn a commission off of anybody else’s sales in the program, only your own.
Is Affiliate Marketing a Pyramid Scheme?
Under a pyramid scheme, it begins with one individual making a sale to another person. That first person then informs the second that they can sell the product as well, so long as the first person gets a cut of their sales.
However, here’s the catch: pyramid scheme members almost always have to pay a monthly membership fee that is dispersed to the membership levels above them, and they almost always need to purchase a specific amount of inventory per month.
Very little emphasis is placed on selling these products, though, as pyramid scheme members are told that by recruiting members, they can receive massive cuts of profit from the new recruit’s membership fees. Due to this structure, a pyramid scheme has a massive emphasis on recruitment, rather than selling an actual product. This is why pyramid schemes have been deemed illegal in many countries.
On the other side of things, multi-level marketing is a legal practice, but it is extremely difficult to make money in this field. The structure is similar to a pyramid scheme in that money is earned partially by referrals of new members, but members are also required to sell actual products for commissions. Due to this, MLM programs are legal.
However, members often have to pay an initial fee to join and they get no say in the products that they choose to sell. One reason affiliate marketers can be so successful is that they choose the products they wish to sell, meaning they can advertise products relevant to the niche their audience is in. Additionally, affiliate marketing programs are free to join, and no real sales work is required whatsoever.
Many MLM participants find it extremely difficult to make money in this space, while affiliate marketing can be an excellent strategy for building an income.
How to Make Money with Affiliate Marketing
One enticing factor about affiliate marketing is the flexibility that comes with the field. Affiliate marketers are not obligated to sell any product. In fact, most affiliate programs allow a marketer to choose whichever product they want. As a result, making money with affiliate marketing can be done with a few small steps:
Determine Your Affiliate Marketing Niche
An affiliate marketer’s income is based on the commission they receive when consumers use their special link to go to the business’s website and purchase the product. As a result, higher interest in the business or product will result in higher income for the affiliate marketer.
Therefore, determine a niche that interests you enough that you could passionately discuss products or services within it, but not one that is so niche that the following is just you and a handful of others. Consumer technology, for example, is a niche that became very popular over the last few years due to how many different products existed within it.
Identify a Reputable Affiliate Program
After identifying the niche you wish to enter, your next step should be determining which reputable affiliate program to join. As a general rule of thumb to avoid affiliate marketing scams, don’t sign up for any programs that require you to pay a one-time or monthly fee. When just starting, aim to work with name-brand companies that you know you can trust.
Ideally, find a program that offers affiliate marketers a high commission rate, a large range of products or services, affiliate marketer support such as direct communications with a support team, and more. Avoid any non-established smaller brand websites when just starting out, as new affiliate marketers will benefit more from name-brand products.
Decide Which Products or Services Fit Your Niche
The third step in making money with affiliate marketing after identifying your niche and an affiliate program you wish to join is to pick products and services you want to promote.
Passion is difficult to fake. For this reason, pick products or services that you genuinely are interested in reviewing. This interest will seep into your discussion and lend you more credibility when viewers or readers look at your commentary. Avoid spreading yourself too thin within your niche. Pick a certain range of products and stay within it when just starting out so that you can continue to build your credibility in that space.
Reviewing multiple products in one piece of content is fine, but make sure they are of similar types. An example would be comparing different smartphones or computers. Find the middle ground between your interests and the interests of your audience, then pick a product from there.
Learn How to Write an Affiliate Marketing Blog Post or Other Content
Finally, making money with affiliate marketing after determining which products to review is all about how you present the content. Writing a blog post or making a video on products or services from a company can be difficult to make engaging, but there are a few strategies that can help:
- Google keyword planner: Learn and understand which keywords are trending in your niche to increase organic traffic to your post
- Take the time to understand the product or service: Become a subject matter expert on whatever it is you are trying to review. Learn the pros, cons, selling points, and other pieces associated with that product to give the most accurate review possible.
- Share your content after publishing: Utilize social media and other platforms to get your content in front of as many eyes as possible. When just starting out, affiliate marketing is a numbers game.
- Sharpen up your videos: If you are advertising via video, take the time to get your recording space in order, make yourself presentable, adjust your lighting, and ensure your microphone is in working order.
By following some of the above tips, you can better increase the odds of organic traffic seeing your affiliate marketing content. The more eyes you get on your work, the greater likelihood of someone using your link to make a purchase.
How to Recognize Affiliate Marketing Scams
Whether you are just starting out or a seasoned affiliate marketing veteran, learning to identify scams can save you time and money. In general, the main problems to keep an eye out for are scammers who attempt to get you to pay to sign up for an affiliate marketing program, companies who are unverifiable and who have unverifiable products, and programs that place a heavy emphasis on recruiting others to the cause.
Learn the common affiliate marketing scams that plague the market today in order to better understand what these scams look like and how to protect yourself against them.
4 Most Common Affiliate Marketing Scams That Hurt Affiliate
There are four primary affiliate marketing scams to keep an eye out for get-rich-quick schemes, fake products or services, pay-to-join programs, and cookie stuffing. At all costs, should you find yourself dealing with one of these types, you should get out as quickly as possible to avoid mistakes in affiliate marketing. Let’s dive deeper into each of these:
Get Rich Quick Schemes
One of the more common scams associated with affiliate marketing is get-rich-quick schemes. Essentially, this scheme promises that you can make a large amount of money extremely quickly without much effort on your part. The reality of this scheme is that there’s no such thing as a get-rich-quick strategy.
Affiliate marketing is challenging work when starting, as is any new venture, and will require great effort. Preventing yourself from falling into a get-rich-quick scheme is about recognizing that you should avoid anyone promising abnormally quick returns with no effort on your behalf.
Cryptocurrency trading has risen in popularity over the last couple of years with many influencers on the Internet claiming you can earn tens of thousands of dollars on trades. The reality of cryptocurrency trading is that the few who did earn these returns only did so because they got lucky with volatility.
There is no evidence to support that cryptocurrency trading can be treated as stock market trading. Placing all your money in cryptocurrency is unadvised as the high volatility of this market can lead to unpredictable losses.
Multi-level Marketing Schemes
As mentioned earlier, multi-level marketing schemes are similar to pyramid schemes, but they are actually legal. While there is a product that you are required to sell, multi-level marketing schemes will promise that you can get rich quick off of commissions and referrals from new members.
The chances of winning the big jackpot are infinitesimal. While the hope that you might be the lucky one to succeed is enticing, placing thousands of dollars into lottery tickets is never advised and can quickly lead to a cycle of debt.
Phony Job Listings
Many phony job listings can be spotted immediately as they will include phrases such as “earn thousands of dollars quick” or other action phrases that imply quick earnings. Whenever you see a job listing, take the time to verify the phone number and the company that has the open position.
COVID-Era Robocall Scams
During Covid-19, new robocall scams emerged that claimed you could have home testing kits, calls selling health insurance, promising financial relief, and more. As a general rule of thumb, be cautious if you are ever pressured into sharing personal information or pressured into making a payment. Don’t respond to texts or calls that come across as suspicious, and never share your financial information over the phone or through texting.
Bad Online Business Courses
A very common get-rich-quick affiliate marketing scheme is an individual promising that if you purchase their business course, they will be able to return your investment tenfold or more. In reality, nobody can make a sure promise such as this. Don’t believe any unaccredited business course that has a high upfront cost with no refunding or reviews.
Mystery Shopper Scams
Someone may reach out to you and ask you to become a mystery shopper for their brand. Mystery shoppers enter establishments hired by the management of that establishment itself. These shoppers report on their experience purchasing products or services to ensure that the establishment maintains high standards.
Any business that demands you pay upfront to become a mystery shopper is a scam. You should never pay for a listing of mystery shopper jobs, and you should never deposit checks into your bank account and then send money back.
Fake Products or Services
The second common affiliate marketing scheme seen today is fake products or services being offered. In reality, many scammers will populate web pages with fake products that are listed under a common brand name. The best way to spot this scam is to look for websites that look crudely put together and with overly positive reviews and no negative reviews.
Certain brands may promise they can help you find love and that their products are geared towards this goal. As an affiliate marketer, you are the first line of defense between consumers and scammers hoping to pocket their money, as well as yours. Recognize when a romance website has no credible reviews and no real product.
Sites that offer friendship, such as talking on the telephone for several minutes in return for money, often have scammers on the other end. The goal is to target people in need of social interaction who are desperate enough to purchase the minutes. Scammers will then pocket the money and never call. Avoid websites such as these when practicing affiliate marketing.
One of the more commonly known scams is a distraught family member giving someone a call and quickly mentioning that they need money to get out of a certain scenario. In reality, there is a scammer on the other end who is hoping that their distraught tone will not tune you into the fact that they aren’t your family member.
Always avoid an immediate answer. Even if it is a true emergency with a family member, you will need details to be able to properly help them. Take the time to ask simple verification questions that only your family member would know, and never wire money to them.
Prince or Government Official
Another common scam is a famous prince or government official calling to solicit your help in the form of a donation. With princes, they typically promise that if you provide them with economic assistance, they will repay you tenfold. Government official scammers typically only ask for donations for their cause.
Recognize that no prince or famous figure will need economic assistance from a stranger. For government officials, inform them that you only make donations through official campaign websites, and find the legitimate website yourself if you wish to donate.
Unknown brands and sellers may promise to send you a product in return for cash. If a website seems poorly created, yet has only positive reviews, it’s very likely that there is no real product. Rather, a scammer is attempting to steal your financial information for malicious purposes.
Similar to an Internet sale, Internet job offers can be tricky as they can appear to come from a real company, but in reality, they are just attempting to get your direct deposit or other financial information. Always verify a job listing by visiting the actual website of a company to see if the listing is there or use an accredited job board site.
The third common affiliate marketing scheme is pay-to-join programs. In truth, no affiliate marketing program should charge you money to join their program. This is a clear indicator of something suspicious going on and should be reason enough to seek another affiliate marketing program.
Some fake platforms will claim that they have years of experience with investing and can make returns that seem remarkably high. While this is enticing on the surface, they will charge you a fee to use their site and then inexplicably disappear with your money. Don’t ever invest your money with sites not registered with regulatory financial boards.
Some scammers may reach out and indicate that you can store money with them and invest it in an offshore account. The goal here is to convince you to transfer your money to the account they operate, which they will then steal under the guise of investing it overseas. Never use an unaccredited offshore investing account.
Pension fraud is another major pay-to-join program scheme that is seen today. Essentially, this scheme targets pension members and occurs when scammers ask these members to transfer their money to an investment portfolio under the guise of incredible returns. Always verify people who claim to be able to invest your pension funds and be sure they are a real and accredited site.
Finally, cookie stuffing is the last common affiliate marketing scheme. Under this scheme, scammers upload fraudulent data points to a website that trick the computer into thinking a sale has been made, paying the scammer commission even though they didn’t do anything. This costs the business money and only benefits the scammer.
Image Cookie Stuffing
Under image cookie stuffing, an affiliate uses an affiliate link as the source of an image file and then places that image on a website. When the browser follows this link, it will act on the commission action without loading an image, to begin with. Watch for images that are seemingly not loading on your website.
Pixel stuffing occurs when a fraudster uploads multiple ads into a single, normal-looking ad. The pixels are so small that they cannot be seen in a single ad, which allows them to get through and take money from the business.
Banner Advertising Cookie Stuffing
In banner advertising cookie stuffing, users don’t even need to click anything on the site they visit for the malicious ads to take effect. They automatically are loaded into a user’s browser when the site is visited.
Pop-Up Cookie Stuffing
This type of cookie stuffing will result in a pop-up on the user’s end that has affiliate links embedded into the web browser code. These ads may have nothing to do with the actual site at all and are simply meant to garner traffic and trick users.
How to Avoid Affiliate Marketing Scams as an Affiliate Marketer
As mentioned, as an affiliate marketer it is also your job to protect consumers, as well as yourself, from affiliate marketing scams. Here are a few tips to help you avoid any scams and keep yourself protected:
- Never pay to join an affiliate marketing program.
- Always verify that a company is offering real products and services.
- Ignore any opportunity that emphasizes recruiting members for referral bonuses.
- Don’t sign up for affiliate marketing programs that give you no choice in what you sell.
- Avoid anybody promising that you can get rich quickly with their affiliate marketing program.
- Download free malware software that can help determine when you visit a malicious website.
- Look up reviews for any affiliate marketing program you are considering joining to be sure it is verifiable.
By following some of the above tips, you can take a great step towards ensuring you stay safe while learning to start affiliate marketing.
Bottom Line: Is Affiliate Marketing a Pyramid Scheme?
All of the above information contains the best collection of my own and other affiliate marketers’ experiences. This information should be used to differentiate affiliate marketing from schemes such as pyramid schemes or multi-level marketing, while also allowing you to understand the common scams associated with this field.
Learning how to start affiliate marketing is a long journey that will not be easy, but anybody willing to put in the effort to grow within their niche can potentially see success. Avoid scams at all costs by only partnering with verifiable businesses whose products are tried and tested. Always give your readers, listeners, or general audience the truth during your reviews to help establish your credibility. By following the advice embedded in this article, you’ll be well on your way to getting started with this exciting field.