Network marketing is also known as multi-level marketing, affiliate marketing as well as tiered marketing. There are many popular companies that operate on this business model such as the Amway Corporation, Mary Kay and Avon. There has been quite a bit of bad press when it comes to this type of business however, before you can make the decision whether network marketing is a worthwhile venture for you, you must first understand the business model and idea behind affiliate marketing.
The simplest way to explain network marketing is to think of franchising. When you want to get into franchising, you pay the company for the ability to do business under that company’s name and using that company’s products and services. The company trains the new owner and agrees to do all of the advertising, marketing and development.
Network marketing does not work in the exact same way as a franchised business, but the business model is similar in many ways. There are even some larger MLM companies that refer to their model as private franchising. The parent company allows independent business owners, also known as IBOs, to receive their products and services and then these individuals market these very same services to their customers.
The most important aspect of the best affiliate programs that allows these independent business owners to make money is that they are able to further expand their businesses by allowing others to set up their own businesses under them. This act is commonly known as sponsoring in the network marketing world. This allows the IBO to not only earn income from the products and services that they sell to their own customers, but they also earn what is considered residual income from the products and services sold by the people that they have sponsored. The original IBO continues to receive this residual income from everyone that he sponsors as well as the people that the person that he has sponsored decides to sponsor under him. This is where the term multi-level marketing comes from.
There are a myriad of Affiliate Marketing Programs that are out there to choose from. Some of them require an initial investment to “buy” into the business while others are free to start. There also may be a period of time before you see real profits. These are just two of the many things that need to be considered before deciding which company is best for you.