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State of the Industry
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June / July 2000

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State of the Industry

Hot Times Ahead

The Four Greatest Fears of Starting Your Own Business

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Your Time Is Now

The Village is Back

A Networking Population Explosion



Richard Brodie started it with his book Virus of the Mind, which depicted and scientifically explained how ideas multiply like viruses. Venture capitalists Tim Draper and Steve Jurvetson carried it a step further. In an article on "viral marketing," they described how Hotmail (a company they funded) had exploded, gaining millions of customers overnight, by virtue of good old word of mouth.

What these men were describing is a phenomenon that has set the stage for a startling new boom in network marketing. In 1999 we saw "multi-affiliate" programs [see sidebar definition] explode through a mechanism we can perhaps best describe as viral marketing.

The leader of the pack was AllAdvantage.com, who set world records for growth of a multi-affiliate or network marketing company. Their "product"? AllAdvantage pays people for performing a service: watching targeted advertising on a small browser as they cruise the Web. It was the first multilevel pay model to reimburse people for performing a direct service. From March of 1999 through March of 2000, AllAdvantage signed up slightly over six million people.

Others have joined the Internet gold rush for "captured eyeballs" (unique registrants), too. Spree.com boomed to one million people in the same time frame, selling products with a multi-affiliate model. Epipo.com, Eopinion.com, BigReferral.com, Cognigen, and others jumped into the fray, sending the numbers of online participants skyrocketing. By March of this year, we had on our databases approximately 89 companies with some form of multi-affiliate marketing using multilevel pay plans.

It was a multi-affiliate population explosion! We set about to try and measure this hard-to-measure phenomenon with as much accuracy as possible.

Intense "Guesstimate" Research

There was one challenging statistical thorn in our side: how many people belong to more than one of these multi-affiliate programs? In other words, how profoundly might these multi-program participants be skewing our multi-affiliate population numbers?

We started our research with names from an AllAdvantage online message board. We sent 63 e-mail questionnaires and got an astounding 36 replies. Surprise! Of these 36 replies, 61 percent (22) said they were in this one program only. Only 11 percent said they were in a network marketing program.

We knew an online marketing group that is in Spree.com. That survey resulted in 51 replies, yielding a figure of 50 percent who said they were participating in only one multi-affiliate program. However, since this was an auxiliary for a portfolio program, 100 percent were in a network marketing program.

A BigReferral.com survey showed that 62 percent belonged to BigReferral.com only. Small samples (fewer than five) in other growing companies showed the same range of figures.

(Disclaimer: these numbers are over 90 days old, and may therefore have changed significantly.)

How do you do an accurate study with the ever-changing Internet? Do we include international multi-affiliates? AllAdvantage estimated at one point that out of over six million, 3.7 million multi-affiliates (85 percent) were in the U.S.. What do you do when multi-affiliate companies don't answer your e-mail and don't list a phone number - or when you call and find yourself in an endless voice mail loop (the digital version of Dante's Inferno)?

You go to the old time-honored process of coming up with a "good guess." Here is a chart of our best guess. Scientific? A little!

Educated Guesstimate Chart
Company % In This Company Only
AllAdvantage.com 61%
Spree.com 50%
BigReferral.com 62%
Average of all three 57%
U.S.: 70% of above 40%

Application Of Educated "Guesstimates"

The next challenge was to figure out how many participants belonged to all the multi-affiliate companies on our list. Again, a lot of these folks don't give phone numbers and don't answer email.

We started with a base that included AllAdvantage.com (6 million), Spree.com (1 million), Epipo.com (1.2 million), Eopinion.com (500,000), Cognigen.com (300,000), and BigReferral.com (200,000).

In the end, we credited the remaining 80-odd companies on our database for another two million multi-affiliate participants. We took this total of 10 million and multiplied it times the 40 percent shown in the "Educated Guesstimate" chart. That brought us to a total of about four million newcomers to multi-affiliate marketing. It seems that about 80 percent of these folks - 3,200,000 - are new to network marketing!

The Final Test

Were these numbers correct? Were they a good guess? How good?

To this basic data, we then applied Bayes' Theorem of Subjective Probability. This mathematical formula, crafted by Thomas Bayes in 1790, is used to quantify the value of the "hunch factor" in the knowledge that exists in people beyond their guesses. (Bayes' Theorem is startlingly accurate - it has been used by the CIA and the military to find lost H-bombs and nuclear submarines!) Eighteen members of the Network Marketing Trend Analysis Institute helped with the final plotting of the formula.

The probability of there being four million new people came in at 41 percent correct. The other 59 percent probability said the number was too low and that it should be higher.

It Is A Great New Age!

This is the greatest growth of network marketing since 1970-71, when it is estimated that Holiday Magic, Koscot, Amway, and Mary Kay brought in a similarly sized population wave. Today, we have new people and new blood being exposed to network marketing in a kinder, gentler way.

Now, most of the multi-affiliate programs do not pay nearly as much as network marketing companies do. (The top earner in All-Advantage.com earns about $5,000 a month.) We predict that this will whet new entrepreneurs' appetites and lead them into selling and training, rather than just referring - in other words, into becoming full-fledged network marketers. We are on the edge of a booming new frontier! The probability of these "New" Multi-Affiliate Programs surviving as we know them is questionable to say the least. We are seeing instability in the Internet advertising market which will affect them greatly. The bright side is that people that have never thought or knew about MLM are being introduced to our great concept.

The full details of this research are available at

  • MLM and Multiaffilate Library

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