Multi Tier Programmes

There are those advertisers who offer multi-tier programmes in which the commission is distributed in the form of a top-down referral network involving new sign-ups. This format may be described as follows:
Publisher 1 signs up to an advertisers’ programme and receives a commission based on the level of activity created by a visitor to the website who has been referred. If publisher 1 is able to encourage publishers 2 and 3 to sign up to the same programme using a code that identifies him as the source of introduction, then all future activities conducted by publishers 2 and 3 will generate additional commission, albeit at a lower rate, for publisher 1.

Such a system, as outlined above, offers a commission for each publisher within the top-down structure, regardless of whether each is aware of the existence of others, in such a way as to generate an income for those sign-up’s who are positioned at a higher level. The aim is to bring on board additional publishers so that the instigator of the introduction may move up the ladder in order to secure greater rewards.

An example of how this top-down referral network has been applied successfully is that of Amway Global, formally known as Quixtar North America. Quixtar set up a network marketing structure and offered its marketing programme to well-known corporations including Barnes & Noble (which is the largest book retailer in the United States), Office Depot (which is a major supplier of office products and services), Sony Music (which is the second-largest global recorded music company) and countless others.

Very few affiliate programmes adopt a two-tier structure. In the main, a one-tier approach is the preferred option. Referral programmes that incorporate a structure involving more than two-tiers 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 create a marketing and sales force by incentivising the promoters of company products not only for the sales they generate themselves, but also for the sales of other promoters that they introduce to the company. The result of this is the creation of a downline of motivated promoters and a top-down structure of multiple levels of compensation which takes the form of a pyramid (conceptualised in the term “pyramid selling”). Both the company and the products it sells are typically marketed directly to the consumers (so avoiding traditional retail sites) and potential business partners by way of referrals resulting from the establishment of developing relationships, together with word-of-mouth marketing.

This begs the question: The style of marketing enunciated by Quixtar – how is it categorised? A close examination of Quixtar's compensation plan clearly suggests that the marketing concept being employed here is one of network marketing. Accordingly, an astute assessment would conclude that the Quixtar plan should not be regarded as affiliate marketing. On the other hand, the principle partners in the company are considered to be, and for all intents and purposes, regard themselves as affiliates. Therefore, it may be argued that Quixtar employs the concept of affiliate marketing on behalf of its partner corporation.

Affiliate – How To Succeed

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