What is the difference between affiliate marketing and multi-level marketing (MLM)?

The main differences between affiliate marketing and multi-level marketing (MLM) lie in their business models, compensation structures, and methods of operation:

1. **Business Model**:
   - **Affiliate Marketing**: Affiliates promote products or services offered by a merchant or advertiser through various online channels. Affiliates earn a commission for each sale, lead, or action they generate through their marketing efforts. Affiliates do not recruit other affiliates; their earnings are solely based on their own performance.
   - **Multi-Level Marketing (MLM)**: MLM involves recruiting a network of distributors who sell products or services directly to consumers and recruit additional distributors into their downline. Distributors earn commissions not only from their own sales but also from the sales made by their downline recruits and the recruits' recruits. MLM typically operates through a hierarchical structure with multiple levels of compensation.

2. **Compensation Structure**:
   - **Affiliate Marketing**: Affiliates earn commissions based on the performance of their marketing efforts, such as the number of sales or leads they generate. Commissions are typically a fixed percentage of the sale amount or a flat fee per action.
   - **Multi-Level Marketing (MLM)**: MLM compensation plans often include multiple levels of commissions, bonuses, and incentives based on the sales performance of the distributor's downline. Distributors can earn commissions not only from their own sales but also from the sales made by their recruits and the subsequent levels in the organization.

3. **Focus**:
   - **Affiliate Marketing**: Affiliate marketing focuses primarily on driving sales and generating leads through various online marketing channels, including content marketing, search engine optimization (SEO), social media marketing, and email marketing.
   - **Multi-Level Marketing (MLM)**: MLM places a strong emphasis on recruiting new distributors and building a network of downline recruits. Distributors are incentivized to recruit and train new members to expand their network and increase their earning potential through overrides and bonuses generated by the sales of their downline.

4. **Risk and Sustainability**:
   - **Affiliate Marketing**: Affiliate marketing typically carries lower risk for affiliates since they do not need to invest in inventory or recruit others to participate. Affiliates can focus on promoting products or services without the burden of managing a network of distributors.
   - **Multi-Level Marketing (MLM)**: MLM involves higher risks and challenges, including the potential for saturation, market saturation, and regulatory scrutiny. Success in MLM often depends on recruiting a large and active downline, which can be difficult to sustain over time.

Overall, while both affiliate marketing and MLM involve performance-based compensation, they differ in their business models, compensation structures, focus on sales versus recruitment, and levels of risk and sustainability. Affiliates earn commissions based on their own performance, while MLM distributors earn commissions from both their own sales and the sales of their downline recruits.