Multi-level programs
There are those advertisers who offer multi-tier programs where the commission is distributed in the form of a top-down referral network involving new signups. This format can be described as follows:
Publisher 1 signs up for an advertiser program and receives a commission based on the level of activity created by a referred website visitor. If Publisher 1 can encourage Publishers 2 and 3 to sign up for the same program using a code that identifies it as the submission source, then all future activities by Publishers 2 and 3 will generate additional commission, albeit at a lower rate. , for publisher 1.
Such a system, as noted above, offers a commission to each publisher within the top-down structure, regardless of whether each is aware of the others’ existence, thereby generating income for subscribers who are positioned at a higher level. The goal is to bring in additional publishers so that the instigator of the introduction can move up the ladder to secure higher rewards.
An example of how this top-down referral network has been successfully applied is that of Amway Global, formally known as Quixtar North America. Quixtar established a network marketing structure and offered its marketing program to well-known corporations such as Barnes & Noble (which is the largest book retailer in the United States), Office Depot (which is a major provider of office products and services ), Sony Music (which is the second largest recorded music company in the world), and many others.
Very few affiliate programs adopt a two-tier structure. In general, a single-tier approach is the preferred option. Referral programs that incorporate a structure that involves more than two levels are classified as multi-level marketing or MLM.
Multi-level marketing, also known as network marketing, direct selling, and referral marketing, relates to a particular style of marketing whose purpose is to build a marketing and sales force by incentivizing promoters of the company’s products not only by the sales they themselves generate, but also from the sales of other promoters they bring into the business. The result of this is the creation of a downline of motivated Promoters and a multi-tiered top-down structure of compensation that takes the form of a pyramid (conceptualized in the term “pyramid selling”). Both the company and the products it sells are typically marketed directly to consumers (thus bypassing traditional retail sites) and potential business partners through referrals resulting from developing relationship building, coupled with word of mouth marketing.
This begs the question: Quixtar’s enunciated marketing style: how does it rank? A close look at Quixtar’s compensation plan clearly suggests that the marketing concept used here is one of network marketing. Consequently, an astute evaluation would conclude that the Quixtar plan should not be considered affiliate marketing. On the other hand, the main partners of the company are considered, and for all purposes, are considered affiliates. Therefore, it can be argued that Quixtar employs the affiliate marketing concept on behalf of its associated corporation.
Affiliate – How to Succeed
