Getting Googled

Brechner of Taos
Oil Painter of landscapes and figures.


NETWORK MARKETING
PAYOUT DISTRIBUTION STUDY

By Jon M. Taylor, Ph.D.

A. Network marketing has wide appeal.
Network marketing (MLM–a.k.a. MLM) offers the
opportunity for an individual to conduct a business without
having to bother with expensive resources such as physical
plant or retail storefront, warehousing, employees,
advertising, or other costs typically associated with running
a business.

With MLM, large (leveraged) incomes can be
produced by recruiting a downline (network) of multiple
layers of distributors upon which a distributor can draw
commissions and bonuses, the amount depending on the
type of compensation plan and the size and character of
one’s “downline.” Such an organization can be built from
one’s own home without the expenses and complications
typically associated with other types of businesses.

MLM offers not only financial independence with
minimal investment, but a level playing field in which
anyone can participate, regardless of sex, age, education, or
financial resources. Other advantages include the social
benefits and recognition of building one’s own organization
and the backing of a MLM company which provides the
products and infrastructure necessary for success.

B. Network marketing poses problems for most
participants, resulting from pyramidal concept,
motivation, and effects.
When the Federal Trade Commission ruled in 1979
that Amway was not an illegal pyramid scheme—mainly
because legitimate products were offered, the floodgates
were opened and multi-level marketing programs began to
proliferate. But what is often ignored is the fact that MLM
programs are still pyramid schemes, modified by a variety
of compensation systems that change the character of the
pyramid, but not the essential pyramidal concept,
motivation, and effects.

The pyramid concept in MLM is seen in multiple
layers of distributors, with lower level distributors
contributing income to an “upline” who may have little to
do with a given sale. This is distinguished from the typical
retail scenario in which a retailer may get two or three times
the return per sale as the wholesaler, whereas with MLM
the upline distributor may get as much or more of a return
per sale (in commissions and bonuses paid by the company)
as the front line distributor who actually sells the product.

Because MLM compensation systems reward front line
distributors only a small commission (usually less than
10%) for selling product, recruiting to gain income from
downline distributors is vital to earning a significant

income. This is distinguished from other direct sales
programs, in which the person selling and servicing the
product typically keeps from 20% to 50% of the sale—
enough incentive to concentrate on the end user as a valued
customer.

The motivation of most MLM is the opportunity to
make large amounts of income for a minimal investment of
time and money. One of the primary appeals of MLM is the
concept (touted at MLM opportunity meetings) of “time
freedom” or “leveraged income,” which allows a person to
gain an income flow from the efforts of others without
having to work directly for one’s own income. But because
of MLM compensation systems, this requires success at
recruiting a downline, more than on selling the products
directly.

Critics complain that many MLM distributors place
too much emphasis on the “opportunity” as opposed to the
product, thus blurring the distinction between the product
and the opportunity. As I mentioned, this can be accounted
for by the reward structure of MLM compensation systems,
which benefits primarily top upline distributors—who may
receive extremely large commissions from their aggregate
downline. An inordinate appeal to greed often becomes the
primary motivation.

A most troubling aspect of MLM is its effects on
people. Because the compensation systems are heavily
weighted to reward upline distributors for their recruitment
efforts and because of the pyramidal nature of these
systems, extraordinary income differentials are created
between upline and downline distributors. In fact, after
deducting expenses for building and maintaining a network,
only a tiny fraction of MLM distributors ever report a
positive income on their income taxes. And if products
purchased from the company (that likely would not have
been purchased were they not participants in the program)
are subtracted, perhaps less than one out of 100 distributors
earns more than a minimum wage for their efforts. A high
percentage of distributors lose money—much higher than
most other legitimate business and income pursuits.
Careful examination of most MLM programs reveals a
pattern of exorbitant incomes accruing to relatively few top
distributors at the expense of hundreds and even thousands
of downline distributors who—even with diligent effort—
come away empty-handed. In this respect MLM is akin to
illegal pyramid schemes.

It is interesting to compare the odds of success of
MLM schemes with legalized gambling in Nevada. It
appears that on average one could do better at most any of

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the gaming tables or slot machines in Las Vegas—without Please mail completed form to:
investing all that time and placing valued relationships at
risk. MLM Payout Distribution Study
Some zealous MLM distributors will mortgage their Consumer Awareness Institute
homes or max out their credit cards (buying MLM products P.O. Box 488
and other expenses) to finance their ambition to achieve top Kaysville, UT 84037
levels in their organization—which is seldom achieved.
Others focus so much on recruiting to meet escalating
volume requirements for higher distributor levels that they
ignore the needs of spouse and family members.
Sometimes the recruiting practices of MLM
distributors are deceptive and overbearing. Often MLM
distributors will alienate friends and family members they
endeavor to recruit for what seems to them a self-centered
pursuit of a vaporous dream.
C. Summary and invitation for rebuttal
In summary, with network marketing, what appears on
the surface to be a fair and enabling marketing system for
participants is in reality a legalized pyramid scheme with
characteristics of concept, motivation, and effects similar to
those of an illegal pyramid scheme.
You are invited to prove me wrong—at least for your
company. This can best be done by providing full disclosure
on payout distribution to your distributors on the attached
form. For the purposes of this study, this information must
be broken down by percentiles, not by distributor level.
Please note that I am not asking you to reveal sensitive
information, such as individual distributor incomes or even
your annual profits, which you may wish to keep
confidential. It is average payout to distributors by
percentiles (as indicated on the attached form) that will
satisfy the objectives of this study for the benefit of
consumers.
Please also note that I am offering two options for your
response—an easy one (Option A) and a more
comprehensive one (Option B). It is assumed that Option A
could be competed quickly and easily from your existing
accounting system.
Option B requires a more extensive breakdown, but
would offer to those interested more conclusive evidence
that your company does or does not base its compensation to
distributors on a pyramidal structure, as discussed above.
For the purposes of this study, Option B would be much
preferred, if you can return such data to us within a month
or so.
We are not making any assumptions about how much
effort was put into any given MLM program or
compensation system, as it relates to success of failure of
any specific distributor or program. So it is important that
all participants in your MLM program for the year be
included, even those who only bought a distributor starter
kit or set of samples—whether or not they have done
anything with it.

Getting Googled

Getting Googled,
This is very important to anyone that advertises on the internet. I heard it referred once as getting in the super bowl, or getting your ad on the super bowl anyway. It doesn't cost anything to get your ad on a search engine such as Google, Yahoo, Ask.com and so on. The trouble is getting good position, in other words the Front Page. Since very few people will look at the second page and almost no one goes beyond that, (except for me) you will have to purchase Adword. Pay Per Click, and you bid on how much you are willing to pay. The more you pay the better chance you have in getting on the top page... However, the person with the deepest pockets always ends up on top.

I have been studying AdWords and Analytics. Which is very important to any marketing professionals in the 21st century. you can't go to school for this yet, but Google is offering training called Seminars for Success.

Well, I hope you like math, and are up on you algorithms. Well in plain everyday language, Google and the others, are using this point system, and they have this thing called a "Spider" It reports activity on your web site and reports back to the search engines. The trick is to make changes on your web site at least once a week. The Spider will report your site as important and raises your rank score, which with enough points you can work yourself up to the top page...Well, it isn't quit that easy, but I'm getting to something I stumbled on to a few weeks ago. There is also a page rank score Google calls PR. The trick is to try and get to PR9 or PR10 This is measured by links and the Click Through Rate they call CTR. And another very important one, the Impressions which I never paid much attention to before this, this is where the algorithms come in. So in order to simplify this I will be adding this information to my free training course.
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The Small Business Man

Wal-mart and other big corporations almost put the small business man out of business. The small business man is beginning to make a come back in a big business way. We are learning how to compete against the bottomless pockets of these large corporations. We have developed the unspoken support teams through Internet and free training classes. By sharing what you've learned, you in return meet many business minded people or entrepreneurs if you will. Old fashion free enterprise, I learned this when I used to teach Basic Life Support for the American Heart Association... Educate the public and they will support you.