The MLMs hiding in ‘Digital Marketing’ TikTok

TikTok MLM
Pictured: Stylised TikTok feed
Anula Wiwatowska
Dec 21, 2023
bullet6 min read
//Perfect storm

Published on December 20, 2023

A TikTok search of the term ‘Digital Marketing’ reveals a hotbed of creators entangled in a pair of multi-level marketing schemes. Research performed by Reviews.org/au found that 45% of the top 50 ‘Digital Marketing’ creators on TikTok were engaged in on-selling either Passive Profit Millionaire or Dave Sharpe’s Legendary Marketing courses.

Passive Profit Millionaire (PPM) is a course originally launched in March 2023 by Hailey Cunningham aka Millionaire Mindset Mama, which the creator claims “to be filled with the exact strategies [she] used to make over $450,000 from creating and selling my own digital products”. The digital product in question is the course itself. 

When purchasing the course, buyers also receive the ‘Master Resell Rights’ to the course which encourages them to sell this product on as their own and “pocket 100% of the earnings”. A survey of over 50 top creators surfaced through TikTok’s search function, found that 30% of ‘Digital Marketing’ profiles are reselling Passive Profit Millionaire - with some selling additional marketing services like content planners, digital product launch kits, and 1:1 sessions with the creator.

We reached out to Hailey Cunningham, and a range of other creators on-selling Passive Profit Millionaire. None were willing to comment.

A further 15% of top creators surveyed were found to be connected to Dave Sharpe’s Legendary Marketing course. Sharpe’s service is more opaque than Passive Profit Millionaire, with representatives using a scripted landing page to garner first party data by offering a free ebook, or joining a 15-Day Challenge. The landing pages ironically highlight the words ‘real’ and ‘legit’ while advertising a strategy that claims to help “ordinary people make 6-figures from home”.

According to a Reddit thread from six months ago, the 15-Day Challenge (that sells for $7USD) acts to upsell recruits to a Blueprint package starting from $2,500USD. Upgrading to this package allows the consultant to become an ‘affiliate marketer’ and earn a $1,000USD commission for every new referral that opts in to the Blueprint package through them. If the recruit does not successfully opt in to the package, the commission is a fraction of the $7USD course fee that potential recruits pay.

The sales structure on both of these straddles the line between multi-level marketing (MLM), and pyramid scheme - the latter being illegal in Australia. MLMs focus on selling products to consumers through personal networks, and recruiting further sales people. Consultants, as they are called, earn commission on their own sales as well as those of their recruits, and their recruits recruits, and so on. This hierarchy is called a downline, and is a primary selling point for MLMs - the promise of earning more money with less active work. Consultants in pyramid schemes on the other hand, make the majority of their money by recruiting new people into the scheme rather than selling products to consumers. 

Both Legendary Marketing and Passive Profit Millionaire pull from both of these funnels. While Passive Profit Millionaire does not have a commission-based downline, the sales surrounding the course and additional services are still products on sale to the public. The sale of these products however, incentivises consultants to recruit more potential sellers. Legendary Marketing representatives however primarily make commissions based on new ‘students’ they bring into the expensive training courses.

While the branding on both courses is starkly different, the underlying message is the same. With these resources you can get out of the 9-5, be an entrepreneur or a business owner, join a community, make a lot of money, and help other people do the same thing. This messaging aligns with the recognised critical analysis of multilevel marketing discourse. According to a 2019 study, MLM consultants use a combination of logic and emotionally persuasive language, and constructed social identities as a way to achieve their sales and recruitment goals.

These social identities tend to lend legitimacy to the products. In the case of these TikTok ‘Digital Marketers’, consultants commonly refer to themselves as ‘entrepreneurs’, and emphasise that they knew nothing before they got started. The key, they infer, is the knowledge about creating and selling ‘digital products’ imparted to them through this course and the community surrounding it. Community-building, and a “go-give” attitude that focuses on sharing the perceived benefits of the organisation play into the emotional discourse. One creator reselling Passive Profit Millionaire repeatedly prompted viewers of a TikTok Live to purchase from their most direct connection rather than herself.

"If someone invited you to this Live, go back to their page and purchase from them." Said the creator, while repeating that they want everyone to succeed.

History shows that success is difficult to come by in MLMs, and the terms and conditions, and financial disclosures from these courses make that clear. Millionaire Mindset Mama’s income disclosure statement notes that “success stories shared within our courses are not typical” while Legendary Marketer states “you should not expect that you will receive exceptional results or recoup the amount spent on the purchases made from [the organisation]”. None of this information is clear in the thousands of videos used to promote the courses however.

Money is of course the driving factor that encourages people to join projects like this, and financial literacy can play a part in how key demographics engage with them. According to a study conducted by Dr Laura de Zwaan for Queensland University of Technology in 2022, a large cohort of people that join MLMs may be more likely to have low financial literacy. 

“What we did find is that there [is] a certain segment of the population who have very low levels of financial literacy, and they’re very optimistic. These are people who are very drawn to multi-level marketing,” Dr de Zwaan told Reviews.org in an interview.

According to Dr de Zwaan and their colleagues’ research, those who fit this profile are more likely to seek out financial information, but their understanding is limited. Considering the younger demographic on TikTok, this makes distribution of these courses through the platform particularly pernicious. 

“There are some legitimate people on there who do a really good job translating this information and making it accessible to people, but then there is a lot of rubbish as well. I think it is difficult to sift through what is good information and what is rubbish.”

Most of the videos connected to on-sellers entice potential recruits with stories about how much money they are making. Like many other MLMs, the financial claims are outlandish, but this may not be clear to those with poor financial literacy skills. Dr de Zwaan advises users to be sceptical about the information they find on the platforms.

“If anyone is trying to generate traffic, if they’re trying to ask people to join, if they’re trying to sell you something, you’ve always got to ask yourself, what is their motivation here? People who are trying to do those things will generally say whatever they need to say to get people in.”

“My other advice would always be to go and independently find information. So not following links, not clicking through, go and look at it yourself and see what you come up with.”

Compared to other MLMs, these ‘Digital Marketing’ courses have some of the lowest barriers to entry and therefore some of the lowest risks. Buying a course doesn’t rope you into reselling it, or leave you with a garage full of stock to get rid of, and most courses are being sold for $497USD which is significantly lower than the sub-$5000AUD average reported MLM spend.

Conversely they have the widest reach. 

The combined following of the profiles we documented to be on-selling these courses exceeded 1.8 million across TikTok and Instagram. At its peak in 2017, infamous clothing MLM LuLaRoe had 80,000 independent consultants. While social media has always played a role in MLM distribution and recruitment, TikTok’s algorithmic feed may make it more dangerous than other platforms. Traditional MLMs like LuLaRoe, Tupperware, and Amway grew as friends and family recruited one another - supported by social platforms to maintain relationships and sales groups. TikTok on the other hand gives creators the chance to expand that scope exponentially, and reach hyper-targeted audiences.

“Certainly people are going to be exposed to them and not realise what they’re being exposed to, and I think that’s a risk.” Dr de Zwaan said.

Dr de Zwaan also spoke about the positive factions of social media that aim to inform and protect people against MLM type schemes. She told Reviews.org that the message is getting through to certain parts of the population, but those that are vulnerable are also going to be more exposed to risk.

Recruitment approaches by MLM companies hinge on interpersonal influence, and in the age of the influencer the scale of these relationships have changed. The more clout and followers a creator can garner, the more validity it may lend to their social posts. It boils down to a traditional sales technique called Keeping Up With the Joneses - these people are doing it, or listening to it, or engaging with it, so it must be sound. This ‘Digital Marketer’ has over 20,000 followers? What they’re selling must work.

If the MLM is anything, it is persistent. Schemes like this have existed since the 1920s, constantly reinventing themselves for new demographics and adapting to societal changes. They have always thrived by creating communities, and now communities of all kinds are founded and nurtured directly on social platforms. It was only a matter of time until influencer culture, and MLMs converged. It is the perfect storm, and we are in its eye.

Anula Wiwatowska
Written by
Anula Wiwatowska
Anula is the Content and Social Media Editor within the Reviews.org extended universe. Working in the tech space since 2020, she covers phone and internet plans, gadgets, smart devices, and the intersection of technology and culture. Anula was a finalist for Best Feature Writer at the 2022 Consensus Awards, and an eight time finalist across categories at the IT Journalism Awards. Her work contributed to WhistleOut's Best Consumer Coverage win in 2023.

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