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  • Learning the Lessons of the Dot-Bomb Era
    Copyright 2002-2005, Bill Platt

    During the late 1990's, banks and investors were falling all 
    over themselves to invest in the new dot com companies wanting 
    to go public. 
    
    While the owners of those companies became paper millionaires 
    overnight, that does not mean much if they did not sell their 
    stocks when the price was still high. I am willing to bet that 
    most did not. Instead, they believed in what they were doing 
    and carried their paper millions with them to bankruptcy court.
    
    As small business owners, we do not have the IPO millions to 
    burn. We have to be more careful and thoughtful with our 
    dollars. 
    
    As small business people, we often tell ourselves... "If only 
    we had more money to advertise our wares, we would be very 
    successful in our endeavors."
    
    Yet, the failed dot com's who are now mockingly referred to as 
    "Dot Bombs", had millions to burn on advertising. So what in 
    the world happened? Where did those miraculous, wondrous and 
    theoretical profits go?
    
    Between January of 2000 and the end of February, 2002, at least 
    806 dot com companies went under according to Webmergers.com. 
    
    There are a number of lessons we can learn from the Dot Bombs, 
    and every lesson learned will permit us to realize the elusive 
    Internet profits that the big boys failed to manifest.
    
    
    LESSON ONE:  
    
    Almost without fail, all Dot Bomb's presented unproven, 
    theoretical models to the banks for their Initial Public 
    Offerings. They had never shown a profit and never would 
    because the models they used could not work.
    
    When the bottom fell out of the Internet advertising market, 
    the companies whose business models were based on selling 
    advertising on their sites or in their networks were the first 
    losers. Many faced 80% drops in revenue nearly overnight.
    
    You and I were the winners. We can now post our advertising on 
    some really high traffic, high profile web sites at very 
    reasonable prices. 
    
    Our lesson here is that we must establish our business on a 
    business model that can be profitable at low volumes before we 
    can even hope to be profitable at high volumes. Cash is not the 
    secret to online profits! Rather, a solid business model is the 
    first secret to online profits.
    
    
    LESSON TWO:
    
    The dangerous thing about being a public company in a new and 
    unproven marketplace is that your investors are constantly 
    clamoring to see a return for their money. 
    
    Most startup companies grow into a profitable enterprise 
    because they have an entrepreneur at the helm. An entrepreneur 
    is a risk-taker by definition. He or she is willing to gamble 
    and take chances, even to change the direction of a company if 
    the road ahead looks dangerous or unprofitable. 
    
    With stock holders breathing down ones neck, this kind of 
    flexibility ceases to exist in the grand scheme of things. 
    
    The lesson is that as a small business owner, we can and must 
    remain flexible. Most especially in an untested and unproven 
    market, we need to sustain our flexibility and keep our eyes 
    on our bottom line and the marketplace. Don't fear change. 
    One day, change could very well become your saving grace.
    
    
    LESSON THREE:
    
    Accountants and analysts tried reasoning with the public 
    during the late 1990's --- during the boom --- concerning the 
    profitability of these companies that people were throwing 
    their savings at. 
    
    Yet the public was more inclined to believe those who were 
    wanting to sell us these shams that the Internet era was 
    different. The argument went like this, "This is a new economic 
    era where the old rules of measuring the bottom line do not 
    apply." 
    
    Hogwash.
    
    History has shown us that these people selling the sham were 
    really people looking to make millions from the ignorance of 
    the public at large. 
    
    The truth is, the same rules that apply to measuring offline 
    businesses must be applied to the online world of business as 
    well. 
    
    We must always measure our successes and failures, based on 
    how they affect our bottom line. We must use concrete numbers 
    and measurements to make our estimations and our decisions. 
    
    We cannot sit and hope that if we throw thousands of dollars 
    into advertising that we will see our money coming back to us. 
    
    Instead, we should measure every advertisement and every 
    advertising medium. We should compare one advertisement against 
    another, and we should compare one advertising media to another. 
    If one is not working for us, we should kill it. If another is 
    working well for us, then we should expand on it. 
    
    The truth is, without a method of measuring results, we will 
    never truly gain the advantage of learning from our successes 
    and failures. Sure, you can guess at what works and what does 
    not, but what if you guess wrong?
    
    The Dot Bomb's threw money at Internet advertising and hoped 
    that something would stick. They figured they had millions, 
    so why did they need to worry... 
    
    In retrospect, they probably kick themselves on a daily basis. 
    If I had squandered millions to no avail, I can guarantee that 
    I would be kicking myself on an daily basis! 
    
    The most important lesson we can take from the Dot Bomb's is 
    that we must measure our results and make our future decisions 
    based on proven results. If it is not profitable, don't do it. 
    If it is profitable, then look to find ways to expand on that 
    profitability. 
    
    Measuring the success of an advertising campaign is as simple 
    as tagging your ad with a special tracking URL or email address 
    to provide yourself a method of tracking results gained from a 
    specific advertisement and advertising media.
    
    In conclusion, take whatever means are necessary to track the 
    successes and failures in your advertising and always watch 
    your bottom line. This is imperative if you wish for your 
    online business to be profitable. Learn the lessons of the 
    Dot Bomb's, Measure or Perish.

    Bill Platt - Are you tired of the hard work and gamble of writing and distributing your own articles for the purpose of building links and traffic to your website? Are you frustrated with reciprocal link building processes? The "Links and Traffic" system is not a link rental system or a reciprocal linking scam. Instead, we create mostly permanent links to your website. And, we guarantee our linking results. http://www.LinksAndTraffic.com



    This article was originally written: April, 2002


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