Is Affiliate Marketing a Pyramid Scheme?


Affiliate marketing may have a bad reputation and you may wonder if it’s a pyramid scheme. You may be curious about how it benefits society and the different ways to do affiliate marketing.

Affiliate marketing is NOT a pyramid scheme. It’s a way to refer people to a merchant and make extra money. 

Keep reading and I’ll share how affiliate marketing can be both good and bad for society. I’ll share the three main ways to do affiliate marketing and advanced methods. Plus, I’ll share what a pyramid scheme involves.

What is a Pyramid Scheme?

A pyramid scheme is when someone is compensated by referring people. The person who is recruited pays money to the person who recruited them.

A pyramid scheme is similar to a multi-level marketing company because they are both recruiting people. The main difference between an MLM or multi-level marketing company is there are actual products and services.

If there were NO products and services being sold then it would be a pyramid scheme.

Affiliate marketing is not a pyramid scheme because actual products and services are being marketed.

When someone buys a product the marketer gets compensated. Think of it like you were buying a home and a real estate agent helped make your dream home a reality. That real estate agent would get compensated for helping you.

One of the most famous cases of a pyramid scheme is Bernie Madoff. Bernie Madoff pretended to invest people’s money, but he used it to pay other people.

There were NO products and services involved and eventually, the pyramid collapsed and many people were hurt.

The reason pyramid schemes are bad is because there is just too much greed. There are no actual products and services that help people.

One of my favorite sayings is…

“A pig gets fat and a hog gets slaughtered.”

Uknown

This means a little greed is ok, too much and it’s not good. In the end, too many people get hurt with pyramid schemes, so society views this as something it doesn’t want.

It’s the same with drugs. If a drug provides more benefits than negatives that it would be legal. 

Coffee used to be illegal, but so many people enjoyed drinking it and the benefits outweighed the negatives, so it became socially acceptable.

Now, there are coffee shops everywhere.

What Affiliate Marketing Truly Is?

Affiliate marketing comes down to being helpful. You’re sharing something that can make a positive difference in a person’s life (at least you should be).

You get compensated by providing a benefit to someone’s life. A part of this also has to do with entertainment. Everyone needs some escape in their life and mixing entertainment with being helpful is this business.

Another way you can be helpful is with education. By helping someone understand a concept you can make a positive difference in their life.

In the simplest terms, the definition of affiliate marketing is posting a link, and if someone clicks on that link and buys a product you get paid.

There are even ways to earn money without a sale and this is called cost per action marketing. Maybe someone clicks on your link and fills out a form with their email address.

A company can pay you for this lead. The main reason affiliate marketing is NOT a pyramid scheme is because there are REAL products and services involved.

Also, usually your not recruiting a person to join your pyramid.

How Affiliate Marketing Benefits Society? 

When done correctly this type of business is a benefit to society. You’re sharing information and ideas that can make a positive difference in someone’s life.

It’s very similar to you viewing the best movie ever. Now, you’re excited and you see your friend for lunch. If you were a selfish asshole you wouldn’t share the BEST movie ever with your friend, right?

If you were truly looking out for your friend then you would want to recommend the movie. The movie made a positive difference in your life, so you want to do the same for your friend.

Your friend appreciates you were thinking of them, and you feel good because you were being helpful.

Why Affiliate Marketing has a Bad Reputation?

Affiliate marketing can also be abused, usually, if someone gets too greedy. One way it can be abused is with spam.

Not everyone agrees with what spam is, but most people would agree that it’s NOT helpful. One example of this would be spam in comments.

Maybe someone made a video about raising a puppy and then a comment comes up pitching an affiliate program for hosting.

Most people watching the video are not interested in hosting. Now, if the comment was about puppies and the link was genuinely beneficial to the community this would be different.

Spam is similar to walking down a street and hearing all the cars honking. You can deal with it, but it’s just annoying. It doesn’t improve the environment.

When an affiliate marketer spam comments, it gives the business model a bad reputation.

Another approach that can give this business a bad reputation is when a marketer promotes a product they don’t use or like.

Maybe the product pays a high commission, but they feel the product sucks. When they share this product it hurts someone else and they benefit.

This comes down to morality. To be fair every profession has shady people that only care about themselves.

Lastly, perhaps someone purchased a product online and had a bad experience. They then blame the marketer and this can add to affiliate marketing getting a bad reputation.

3 Different Approaches to Affiliate Marketing 

There are 3 main approaches you can work with affiliate marketing.

  • Blog
  • Youtube
  • Other SocialMedia

One way is by creating a blog and writing about a topic.

Your posts will get traffic from Google and other search engines. Then in your blog posts, you can share helpful products.

When someone clicks on one of these products and makes a purchase you will get compensated. 

This method does work but it’s very slow. It can take a blog article 5-10 months to fully get ranked in Google. Also, you’re relying on Google and this can be risky.

To make blogging less risky you can re-purpose your content on other sites such as Linkedin, Medium, Quora, Tiktok and others.

The second way to do affiliate marketing is with Youtube. You can create a Youtube channel around a niche. In your video, you can market a link in the description of the video.

When someone clicks on the link and makes a purchase then you can get paid. Youtube also takes time but you can get visitors faster and thus earn money more quickly than a blog.

The problem with Youtube is your playing in someone else’s sandbox!

Yep, you don’t OWN the sandbox and this is risky because Youtube can remove videos, put ads anywhere they want or hurt your rankings.

The third way to do affiliate marketing is by using other social media. Yes, you can promote affiliate products using popular social media platforms such as Facebook, Twitter, Pinterest, Linkedin, TikTok and many others.

Twitter has been VERY beneficial to me and I’ve gotten TONS of visitors from it. You can learn how I get visitors from Twitter by clicking on the link HERE.

Tiktok can be more of a challenge because they don’t allow a clickable link. What I do is just mention my website name in the video and physically write it and I can get traffic this way.

Then when someone is on my website if they click on an affiliate link I can get paid.

What is fun about affiliate marketing is you can stick to 1 method or you can mix others in.

There is a lot of flexibility and creativity that can make this business FUN.

Advanced Affiliate Marketing

There are MANY other ways to make money with affiliate marketing. One of the more advanced methods is to use email.

Yes, you can get something called an autoresponder service and send out emails that market a product. One of the many benefits of using email is that you own the list.

This means you can market products to someone years into the future if you want. Also, your conversion rates can be much higher.

The reason your conversion rate can be higher is that you can contact someone multiple times for an affiliate offer. You can also create more urgency using your emails.

The trick is you have to know how to do email marketing correctly, so you don’t annoy someone. There is only 1 place I recommend to learn how to do this. The price is insanely low for the value of the education. 

Plus, you can use these methods even if you don’t do email marketing. You can learn more by clicking on the link HERE.

Another advanced method is by using a podcast. To do affiliate marketing with a podcast it helps to own a domain name that passes the radio test.

This means if you say your domain name someone can easily spell it. Then what you can do is tell people on your podcast to view your website and to type in the domain name directly.

When someone visits your website then they can click on an affiliate link and you can earn money this way. With Soundcloud and Anchor.Fm, both are podcasting platforms and can support a link in the description of your podcast episode.

Anchor.Fm submits your podcast to many other platforms and here is a list.

  • Spotify
  • Apple Podcasts
  • Castbox
  • Google Podcasts
  • Overcast
  • Pocket Casts
  • RadioPublic

There are many other approaches and methods to do affiliate marketing. The main thing is your trying to be helpful and sharing products that you care about.

I hope this post on is affiliate marketing a pyramid scheme was helpful to you, have a nice day.

Kevin

Affiliate marketer for 10 years, domain investor for 2 years, a recent crypto guy, and part-time surfer. Hopefully, this blog can benefit you.

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