I've decided to write this article because a lot of people are reaching out to me through the site or on social media to ask “is affiliate marketing a pyramid scheme?”, and I think it's worth putting an answer out there with my thoughts on the legitimacy of affiliate marketing.
If you are considering taking the leap into starting your own online business with affiliate marketing, you will want to be completely sure that this type of business ownership is 100% legitimate and safe.
After all, the "Start An Online Business scam" is one of the biggest scams going these days!
The internet can be a murky place to make money so it's no surprise that when you look at the level of monthly income that can be generated through affiliate marketing, for some people it may seem too good to be true.
In this concise article, I hope I can provide reassurance that building an online business through affiliate marketing is not a scam but is rather a very satisfying way of legitimately obtaining financial freedom.
The takeaways are quick and simple and should make spotting online scams that little bit easier.
So let's get into this!
To give you the quick answer, no, affiliate marketing is NOT a pyramid scheme
But if you want to see my workings out, you'll need to keep reading.
The easiest way to demonstrate that affiliate marketing has nothing to do with pyramid schemes is to explain what a pyramid scheme is.
What is a pyramid scheme?
A pyramid scheme is a rogue investment scheme, program, or business proposal that is reliant on recruiting an ever-increasing number of investors who are then sent out to gather further investors. At each level of these fraudulent schemes the number of base-level investors increases, forming a pyramid, with money funneled upwards to pay dividends or earnings to earlier investors.
They also are known as franchise fraud and are closely related to the outlawed Ponzi schemes, and are usually illegal because pyramid schemes are unsustainable and participant investors will eventually run out of people to recruit and profits dry up.
Pyramid schemes often appear obvious only after they have collapsed.
This is because these schemes have different guises and almost always present themselves as legitimate businesses, appropriating names and terminology from the business world to deceive unwitting participants.
So it is understandable that people may be concerned that affiliate marketing is a type of affiliate scheme and be cautious to set up an online business because of this.
Affiliate marketing is a legitimate business model for credible, profitable owner-run businesses
Fraudulent pyramid schemes and similar enterprises rely on the recruitment of new participants for their growth rather than the legitimate marketing and sale of worthwhile products and services.
They prey upon the desire people have for finding ways of generating income for themselves and building productive lives.
Affiliate marketing could not be further from pyramid schemes and is simply a form of digital marketing where the products and services of a company are marketed online, in return for a commission from the company.
The commission is never greater than the value of the product or service promoted and users who are referred to the company's site visit freely, according to their own interest.
Affiliate marketers build and own online publishing businesses, producing the content that potential customers require to make a decision on purchasing a particular product.
The content produced may be an informative guide or product review, anything that will be of use in helping a user find and select the products that are right for them.
You will find affiliate marketers making money by promoting the products and services of leading companies like Amazon, eBay, and TripAdvisor.
The affiliate program is never set up through an intermediary or third party, everything is open and direct.
The Amazon associates program is one of the most popular platforms, especially for beginners. It's easy to join and easy to start making passive income quickly.
Full-time blogging builds profitable businesses with passive income from the ground up
With affiliate marketing, you are building your own business rather than investing or partnering in someone else's venture.
Affiliate marketers start their websites in different ways. For some, it is a natural progression of a blog written about a passion that attracts a sizable audience.
Other affiliate marketers are adept at finding a niche interest or area of knowledge where they can help users by providing authoritative content.
Some affiliate marketers are true investors, outsourcing all aspects of running their websites to a skilled team of content marketing professionals. Whatever the way the business is run, it is 100% owned and operated by you.
You can earn money as an affiliate marketer in a variety of ways.
Unlike clandestine pyramid schemes, you are 100% in control of how you generate an income online with affiliate marketing.
When I think about it, there is no official rulebook or method for making money from affiliate marketing.
You don't need to join a program or pay someone to show you as there is so much you can learn for free online.
In addition, you can join any, or as many affiliate marketing programs as you want.
Nothing is prescribed or restricted as long as you abide within the terms and conditions of the affiliate program's agreement.
When it comes to making money, affiliate marketers with a website that has good traffic are not limited to affiliate programs for generating income.
You will also find affiliate marketers earning advertising revenue and even selling their own products and services through their sites.
They can also expand onto YouTube, or into email marketing.
And the best bit is that once you have produced a piece of content it can generate traffic and earn for you, long after you hit the publish button.
If you want to learn more about how full-time bloggers and affiliate marketers earn their income why not read my article "How do bloggers make their money?".
There's no recruitment of 'investors' here, more than likely you will be the one paying writers and other content creators to help you grow.
I want to emphasize that affiliate marketers are running their own, legitimate businesses, rather than participating in a scheme or program which requires other people's money to survive.
This means that most of the time you will be pulling long hours by yourself or coordinating the efforts of a hired team that includes web designers, copywriters, graphic designers, and social media experts.
My key pointers for spotting an online pyramid scheme
I hope this article has helped clear things up for you and left you confident that affiliate marketing is legit.
However there is nothing to stop a pyramid scheme posing as an affiliate marketing opportunity, so to help you stay clear of unscrupulous online businesses, here are 8 quick points that will help you spot pyramid schemes and other online scams.
#1 Pyramid schemes often have lots of hype.
There will be many online seminars, multimedia presentations and aspirational testimonials but little actual information about the company or its business model.
#2 The commissions you earn from sales are greater than the value of the product.
This is a waving red flag for a pyramid scheme and may fail a test of legality.
#3 You get more commission for recruiting people than from selling the actual product.
This is an indication that the real business model you are participating in is getting new recruits to pay fees and buy stock rather than selling a product or service. This is not sustainable long-term.
#4 An absence of contact details or support.
Legitimate businesses will be transparent and available, providing a timely response to your queries or concerns.
#5 Stories of large income earned online with little explanation of how the money is made.
I find reading accounts of people who have established successful legitimate online businesses inspiring and informative as they often provide income reports and detailed explanations of what worked for them.
However, Facebook ads with people in designer clothes or on beaches with the phrase "Start your Online Business" attached are likely to be dubious.
#6 Paying to join an affiliate programme.
An absolute no-no. Companies pay the affiliate marketer, not the other way round.
#7 Programmes that offer turnkey packages that are overpriced.
If you're new to affiliate marketing, a company that provides the website, branding, and content to get started seems like a great deal.
However, you will probably spend less money and get better results by arranging to build your website yourself, and you'll also own the domain which is vital!
#8 You have to recruit new people to the programme to get paid.
If your primary means of making money in a program involves roping in other people to be part of the program, you may be investing in a pyramid scheme.
I've found that taking the time to research and read a wide variety of information has helped me swerve from online scams.
We are fortunate to be in a time where there are so many easily accessible resources and options for learning how to start a legitimate online business.
I've never relied on any single source of advice and information and do not advise that you do either. That's why I make the effort to share my journey here, too.
If your looking to start affiliate marketing and would like a trusted course that shows you a clear path to success.
I can highly recommend my good friend Morten from Passive Income Geek course. Price here!
His story is real and he walks the walk.
He doesn't just sell a course he actually owns and runs a very successful portfolio of websites including Godownsize.com which earns over $30k a month passively.
Don't let the pyramid schemes or scams deter you in your search for passive income.
It's a shame that with so many legitimate opportunities to earn life-changing sums of money online, people set up exploitative scams that make other people the merchandise.
Don't be discouraged. Keep learning and experimenting and I am sure that you will soon find that your online business is off the ground!
Before you go!
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