There are many people in the world, whether they frequent the internet or not, that make the mistake of saying that affiliate marketing and MLM or multi level marketing, are one and the same. They are, in actual fact, totally different, and here is a brief reason why.
Firstly, MLM marketing has been around for a lot longer than most people think. This type of marketing can be done offline, and many people still do today when selling baby products for someone else. This is what a multilevel marketer does. They become associated with a certain product that they like or believe in, which they then buy from their supplier and resell to the public at a profit. As you can see, MLM is simply having a small franchise of a large business.
The reason that it is called MULTI level marketing is because if you are a marketer, you can then start your own chain of marketers. This is called a down line. What would happen is that you buy your products from your supplier at a discounted price and sell them at market value, but if you have a friend that also wants to start this business he or she can buy their batch of products directly from you, instead of going to your supplier. In this way you can make more money, because you will sell them to him or her at a slightly higher rate in order to make a profit.
This can continue, but what most people do not realize is that the further down the line you go, the less money you make. This type of marketing technique can be difficult to sustain for a long period of time.
Affiliate marketing is totally different. You are not selling any products directly. You are simply the mouthpiece, or the advertising board that tells people where to go and buy products. You will not have to purchase anything, but you will still make money just for telling people where to go to get a product. Affiliates get a commission when the person that they refer to a website buys something, so in this way the company is paying for a good lead and they will pay generously.
Another difference between affiliates and MLM's is that all affiliates get paid the same amount of commission. Instead of people joining on the bottom of a line, they join into an adjacent line. You can find that affiliates will get paid an extra amount if they refer more affiliates, but this will be a once off commission and they will not have any further dealings with the affiliate. Sometimes companies will reward affiliates who get other affiliates by paying a small commission when their affiliate generates a sale. This amount however, is totally separate to the new affiliate's amount. They will still get paid as much as older affiliates.
If you think about it this way; the MLM style of marketing is direct sales for a product, whereas affiliate marketing is an advertisement telling people where to buy a product.