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Weathering the Dot-Com Bomb
Weathering the Dot-Com Bomb
by Donna Schwartz Mills
The big story at last year's SuperBowl - aside from the
game itself - was the amount of advertising dollars spent
by Internet companies. Flush with money from venture
capitalists, their marketing folks barely blinked at the
huge figures required to get into the event's ad game
(which sells this year for $2.5 million per 30-second spot).
We all know how that story ended. The only web companies
expected to repeat at this year's SuperBowl are Monster.com,
Hot Jobs and and e*Trade. The others included WebMD (4th
quarter losses = $50 million), and most notably, Pets.com.
This is big bad news for those who invested money in these
companies hoping for double-digit returns. And their woes
have trickled down to those of us who operate our little
dot-com companies without the benefit of venture capital
(other than what we keep in our own bank accounts).
The trickle-down factor has resulted in fewer advertising
dollars allocated for the Internet. If you publish an
ezine, you have probably already tightened a few notches
on your belt. According to TechWeb, 'Ad rates are now
nearly impossible to track because companies are no longer
paying designated prices. In ad parlance, these sales are
*off the rate card,*' and those companies who are buying
ads are enjoying discounts of up to 50%.
Smart ezine publishers who have seen their ad revenues
plummet are looking toward other income sources. Many turn
to affiliate programs -- but all is not rosy there, either.
'In the last year, I would estimate that about 10 - 15% of
the online stores have fallen," says Internet entrepreneur
Dennis Sutter.
As webmaster of two online malls (The Shoppers Dream
http://www.theshoppersdream.com and Pros Salon Supply
http://www.prossalonsupply.com ), Dennis is a member of
over 500 different affiliate programs, and he says the
continuing stream of dot-com downsizing forces him to spend
hours each week removing dead affiliate links... and has
definitely affected his bottom line.
'Some of the merchants have just out right ended their
affiliate programs and totally ignored the fact that they
still owe commissions to their affiliates,' he says. 'They
know that the average affiliate does not have the means to
sue them for breach of contract.'
Not all companies with money problems have dropped out of
the affiliate game. Many continue to hang in by reducing
commissions, a strategy Dennis feels is short-sighted.
'The reduction in payout rates has made some merchants too
costly to carry as they insist that when a visitor clicks on
their link, that they totally leave my site. To lose a
visitor for a payout of 1 or 2 cents is absurd!' he says.
But Dennis and is still optimistic about the Internet's
potential to earn even small players a solid income. So are
the experts at TechWeb, who note that ad impressions reached
an all-time high in December despite the soft market (a
total of 65 *billion*).
TechWeb quoted ad exec Charlie Buchwalter, who is bullish on
the long-term prospects for internet advertising. 'It's not
going to happen overnight," said Buchwalter. 'The growth
will be gradual, with traditional companies that have been
around longer with the bigger marketing budgets learning how
to advertise online.'
So what should the 'little guys' do while they wait for the
market giants get their online act together?
Dennis suggests that webmasters carefully evaluate each
merchant's offerings in light of the current economic
climate.
'Stick with the essentials that people always need. (i.e.,
clothing, household items, etc.) Cut back on the luxury
items merchants. Post any discounts that you can find. The
more you help your shoppers out, the more they can afford to
buy. And they will appreciate the extra effort that you have
gone through to help them find quality items AND save money.'
That's good advice for entrepreneurs of all sizes in this
crazy economy.
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This article may be reprinted with permission by including
the following resource box:
Donna Schwartz Mills is the Editor/Webmaster of the
ParentPreneur Club
http://parentpreneurclub.com/cgi-bin/art/pl.cgi?dc ,
helping parents work at home so they can be there for their
families. Get the latest home business tips and tools by
subscribing to ParentPreneur Weekly at
mailto:subscribe@parentpreneurclub.com . Donna also edits
NOBOSS Online, the newsletter for home-based entrepreneurs
doing business on the web. To subscribe, send a blank email
to mailto:online-subscribe@noboss.com
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