This Video Explains Which Statement is True: Celebrity Endorsements Improve Marketing or Celebrity Endorsements are a Double-Edged Sword.

In the conventional advertising world, celebrity endorsement is very effective. Among the factors for effectiveness includes the fame of the celebrity, the connection with the product or service, whether or not the celebrity is a user and whether or not the statements of the celebrity appear as truly authentic or merely a “pay for endorsement.”

The use of celebrity endorsement is far less successful in the direct selling industry. In fact, the advertising model for MLM is quite different than conventional advertising. In conventional distribution, such as retail stores, internet or broadcast media, companies pay advertising dollars and endorsement fees to promote the brand. However, in direct selling, the commissions and rewards paid to distributors are effectively the advertising

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There are a lot of outspoken bloggers and critics online, as well as negative opinions floating around the social networks, but the positives drown out the negatives. It’s not hard to find a loud voice criticizing the direct selling industry through a quick Google search. And it is true… there are many pyramid/Ponzi schemes, primarily internationally based, that parade themselves as MLM/direct delling… and they are not. They are merely pyramid headhunting recruitment schemes that often use bogus products and services as an excuse to move money. The entire emphasis of such organizations is to cause investors to pay money and cause others to do the same, with a thin veneer of an actual product or service. In fact, the revenue to pay commissions instead comes from distributor payments and not sales to the ultimate user.

Despite this, the facts remains MLM and direct selling are a major part of the fabric of commerce. Statistics on 2014 sales, compiled by the World Federation of Direct Selling Associations, indicate global sales of $183 billion and 100 million distributors. In the U.S., there are 18 million distributors posting $35 billion in sales. Numerous direct selling companies are traded on the NYSE.

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What’s the difference between MLM, network marketing, party plan, and direct sales?

Actually, they all fall under the general umbrella of “direct sales.” Historically, direct selling only involved direct person-to-person sales, often door-to-door. In the 1950’s companies such as Amway, Shaklee and Mary Kay introduced to the direct seller the ability to sponsor other sellers, to build a sales organization, and to receive an override commission on the sales in their sales organization at multiple levels. This is the origin of MLM, multilevel marketing and network marketing, which are all the same thing; i.e., direct sales with a multiple-level

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The MLM industry doesn’t simply embody cosmetics and plastic containers anymore. Although cosmetics and nutritional products are still leading sellers in the MLM industry, new companies are coming up with new products all the time. Today, the direct selling industry offers nearly every product available to retail consumers, and new products and services are being offered all the time. One of the newest categories of service being offered by direct selling companies include energy products: electricity, natural gas, and green energy services, among others.

MLM companies are beginning to direct their attention towards men. The most famous, perhaps, is Man Cave. Direct selling is such a successful business model that even Donald Trump joined the bandwagon with his own MLM company, The Trump Network.

The Direct Selling Association has over 70 product and service categories offered by direct selling companies, from vacuum cleaners to coffee, from jewelry to insurance, from photography to cutlery. MLMLegal.com offers over 700 MLM company profiles in categories ranging from wine to emergency preparedness, from loans to greeting cards, to hobby and crafts.

There are a lot of choices with so many products and services being offered by direct selling companies. With so much to choose from, what are your favorite products (or services) to sell in your direct selling business? If you are a MLM customer, what products do you prefer to purchase?

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Jody (Coughlin) Greene argues in her Forbes article titled “Is MLM a Bad Word?” that MLM has had a bad reputation because its structure is similar to pyramid schemes and its negative image isn’t deserved.

Not only is network marketing a proven business, being one of the longest-running business models in the United States, but its marketing strategy has also proven successful. Distributors create income through their personal sales and the sales of those who they’ve recruited in their downline. Because of its pyramid-like structure, MLM has in some cases gotten a bad name.

Ms. Greene explains just some of the criticisms faced by network marketing companies:

Criticism has focused on their similarity to illegal pyramid schemes (hence the “scheme” reference), price-fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging if not requiring salespeople to purchase and use the company’s products, potential exploitation of personal relationships which are used as new sales and recruiting targets, complex and sometimes exaggerated compensation schemes, and cult-like techniques which some groups use to enhance their members’ enthusiasm and devotion.

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According to an article at MSN’s website titled “Queen Elizabeth’s eating habits revealed,” former royal chef Darren McGrady states that Queen Elizabeth enjoys a bowl of cereal every morning topped with fruits or nuts from her garden, which are stored in one of the most popular direct selling products, Tupperware. Perhaps even the Queen of England owning and using Tupperware products shouldn’t be a surprise considering Tupperware was ranked the seventh largest direct selling company in 2010, with $2.3 billion in net sales.

As one of the largest MLM companies in the world, Tupperware operates in over 100 countries and has over two million salespeople. Tupperware’s top five consumers are Germany, America, Mexico, France, and Australia. The company itself was founded in 1945 by Earl Tupper and grew to be quite competitive with its “burping seal” technology.

The top ten largest global direct selling companies include 1) Avon Products, Inc., 2) Amway,

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The question below is taken from one of Mr. Babener’s client’s distributors’ Q&A pamphlets:

Q: My friends and relatives often ask me if direct selling/MLM/network marketing is a “real business”… I would like to give them something meaningful to consider … your take?

A: People have always asked that question… and it is a fair question. Keep in mind we have nearly 16 million people in the United States selling consumer products and services in the range of $30 billion and more than 90 million people around the world doing this with sales exceeding $150 billion. This activity penetrates the fabric of our society. Earlier statistics, presented by the Direct Selling Association, have indicated that, perhaps, one in ten households have somebody who is doing this part-time.

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Can you make it just by starting small, or do you have to start big? The fact is that the most successful direct selling companies all started out small. That’s why we have hosted more than 60 Starting and Running the Direct Selling Company Conferences, with over 5,000-6,000 attendees who have attended our event.

We’ve worked with companies that have started with nothing to companies that are now doing $5 billion or more.  Look at the history of some MLM leaders, perhaps a company like Amway, which does five, six, seven billion dollars a year around the world.  This company was started by owners who began by mixing biodegradable soap in their bath tub.

Doris Christopher started Pampered Chef, spending the first few years in her basement.  Of course, later on it bought by Warren Buffet and Berkshire Hathaway for a fortune.

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PBS’ American Experience launches the documentary film, Tupperware!

PBS’s American Experience program recently featured the documentary film Tupperware! This film utilizes interviews from executives and top-ranking distributors to tell the story of the early days of the Tupperware company. The famous Tupperware product was developed by Earl Silus Tupper, a man from a poor farming family who was determined to become rich. His product was initially sold in the retail environment. When he and Brownie Wise met, a duo converged and home parties brought the product into the homes of thousands of American women. 

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