Weathering the Dot-Com Bomb
Category: Home Based Business - Marketing | Date: 2003-06-19 |
The big story at last years 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 events 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 years 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 Internets 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. Its 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 merchants 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.
Thats good advice for entrepreneurs of all sizes in this crazy economy.
About the Author
Donna Schwartz Mills is the work-at-home parent behind the ParentPreneur Club parentpreneurclub.com
Find out how were getting healthy while earning a healthy living at home - http://www.unitoday.net/socalmom
:To contact see details below.
donna@parentpreneurclub.com
http://www.parentpreneurclub.com
We all know how that story ended. The only web companies expected to repeat at this years 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 Internets 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. Its 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 merchants 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.
Thats good advice for entrepreneurs of all sizes in this crazy economy.
About the Author
Donna Schwartz Mills is the work-at-home parent behind the ParentPreneur Club parentpreneurclub.com
Find out how were getting healthy while earning a healthy living at home - http://www.unitoday.net/socalmom
:To contact see details below.
donna@parentpreneurclub.com
http://www.parentpreneurclub.com
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