High Ticket Affiliate Marketing is not a scam, and it is not a pyramid scheme. HTAM is a legitimate and simple business model in which affiliates promote a product directly and are rewarded for their direct sales.
Pyramid schemes, Multi-Level Marketing or Network Marketing, are other things that have nothing to do with Affiliate Marketing. And in addition to that, let’s clarify that HTAM is not that easy (beginners should start here).
However, there are some “grey” situations where things are unclear, which probably gave rise to these doubts and rumors.
In this post, I will try to shed some light on everything.
What is Multi-Level Marketing?
Multi-Level Marketing (MLM) is a business strategy that generates revenue through a network of freelance distributors who recruit and sell products directly to consumers. In MLM, participants earn commissions not only on their sales but also on the sales made by their recruits, creating multiple levels of income.
This was an encyclopedic definition. But now let’s see in more detail how it works.
First, it should be specified that MLM, as a concept, is not a scam but a legitimate business model. Some of the most famous examples of legitimate MLMs, which you have surely heard of already, include:
So, what is the problem?
There is nothing wrong with selling something and taking a cut off the sale; in that sense, it is the same as in Affiliate Marketing. The problem is that in MLM, you have to buy the product you sell, and this in Affiliate Marketing does not happen.
In any case, even buying and reselling a product is not a problem in itself. What happens most of the time, however, is that sellers soon realize that simply making money from direct sales to interested customers is not enough.
And that is why they start trying to recruit other sellers, who in turn will have to buy inventory from the seller who recruited them.
This is not really a scam, but often an MLM becomes a buying and selling of goods between sellers only, not between sellers and real customers, done only to generate commissions, and therefore not very sustainable, except for those at the very top of the network.
What is a pyramid scheme?
So, we said that an MLM is based on two main concepts:
- you can buy the product as a freelancer (partner), sell it to customers, and earn a commission from your direct sales
- you can hire other partners and also earn a commission from their sales, as well as from any sub-partners that will be recruited by them
When it comes to a pyramid scheme, instead, point 1 hardly comes into consideration, and everything takes place around point 2.
In a pyramid scheme, partners are invited and incited to work primarily or exclusively to recruit new partners. The greatest economic benefits are associated with hiring a certain number of new partners. In fact, the whole scheme is based on the payments that partners must make in order to start and continue working within the fake MLM.
Partners are lured in with the false promise of making lots of money easily, but what really happens is that new partners at the beginning are forced to spend a lot of their own money on inventory, courses, upgrades, and other “excuses” with which the company tries to squeeze more money out of them.
The FTC itself explains these processes very well and what pyramid scheme really means.
In other words, in a pyramid scheme, the system seems to be based solely on hiring new people rather than selling the product that should be promoted. The only products that are sold are actually those purchased the first time by the new partner. You can see some examples here.
Why High-Ticket Affiliate Marketing is not a Pyramid Scheme
Now that you know what a pyramid scheme is, it remains for us to clarify what Affiliate Marketing is and, more precisely, what High-Ticket Affiliate Marketing is.
I talked about it in the two posts I just linked to you, but I include the definitions of both here:
Affiliate marketing is a method of online promotion of products or services. Affiliates promote the products of others online and are paid only if the visitors they were able to bring to the seller’s site make purchases or specific actions.
High Ticket Affiliate Marketing is a type of Affiliate Marketing in which the Affiliate promotes very expensive physical or digital products for very high commissions, at least $100 going up to several thousand dollars per sale.
As you have been able to verify, with Affiliate Marketing, you have to actually promote and sell something.
In the case of High-Ticket Affiliate Marketing, it is something expensive.
Anyway, the part about hiring new people does not exist (in some cases, actually, something “strange” is there, but we will see it later).
New affiliates do not have to pay anything to start promoting the product, so the whole business is based on sales of the product to real customers and the associated sales commissions.
Why do people think HTAM is a Pyramid Scheme?
At this point, you can be confident that High-Ticket Affiliate Marketing is a legitimate activity.
It then becomes useful to understand why doubts may arise in some people about its legitimacy.
I think this doubt may arise for several reasons. I will try to explain all of them, but you can write to me in the comments if, by chance, I failed to clarify yours.
Sub-Affiliates: There are some affiliate programs that allow affiliates to earn an additional commission from the sales of sub-affiliates introduced by them, e.g. XM.com, a program I participate in, which offers a 10% on sub-affiliate sales. This definitely resembles Network Marketing but with some huge differences: No affiliates pay or have to buy anything to participate. Commissions are generated from real paying customers, not from other affiliates’ purchases.
Make money promise: Many High-Ticket affiliate programs involve products closely related to the concept of “making money online.” They are usually courses of some sort to learn some kind of digital marketing strategy for building an online business. All this talk of “making money online” can and should rightly create some suspicion, but more about the quality or effectiveness of the product than whether it is a pyramid scheme or not. The problem may be that you are buying an expensive product that promises to teach you how to make money online easily, but in reality is not easy, not at all.
Self-promotion: Perhaps the most concrete case that raises suspicions is related specifically to two famous high-ticket courses on Affiliate Marketing: one is Super Affiliate System by John Crestani, and the other is Affiliate Marketing Business Blueprint by Legendary Marketer. These are two high-ticket courses in which it is explained how to do affiliate marketing. The “problem” is that, in the end, the courses push hard to promote the course itself to other potential affiliates. This precisely resembles the concept of a pyramid scheme. Although this may be suspicious, it is actually quite logical that a course that teaches Affiliate Marketing then calls for promoting the course itself with the same strategies. That this happens does not seem to me to be much of a problem; rather, we should talk about the (questionable) quality of teaching of these two courses. At most, that may be the real problem.