Are businesses really making money on the Internet? Yes! This Spring, ActivMedia found that nearly a quarter of its respondents reported financially successful Internet sites. They estimate total sales via the Internet at $118 million in the past year. With all the media hype, you'd think making money with a Web site is a piece of cake. The truth is that while small businesses are setting up successful Web sites, that there is no short-cut to careful and persistent marketing. The first step in a strategy is to determine just who your potential customers are.

WHO IS ON THE INTERNET?
Conservative estimates place number of people surfing the Net at six to 14 million, expected to grow by an additional six million U.S. adults over the next six months. A recent study by Yankelovich Partners discovered that 14% of all American adults use on-line commercial services (such as CompuServe) and non-commercial services (such as the Internet), and average a little over 30 minutes per day on-line. Of these, 22% had made some kind of on-line purchase in the past year. While every sort of person is found in cyberspace, they determined that 57% of on-line users are men, and are more likely to be younger, single, and better educated than the general population. Thirty-three per cent of on-line users have a college degree, and 57% have had at least some college training, substantially higher than the population at large. But the profile is changing, with more women entering cyberspace in the last few months.

The average Internet user has greater disposable income, as well. O'Reilly & Associates report that the median annual household income of Internet users in 1994 was between $50,000 and $75,000. Of non-academic users, the most frequent job occupations were sales (19%) and engineering (15%). To tap into this desirable market, though, you have to be selling the right products.

WHAT SELLS?
While you'd expect computer-related products to do well on the Internet, sales of other products and services doesn't seem to follow any discernible pattern as yet. While information (books, reports, papers) has been the stock-in-trade of the Internet since its university beginnings, we find Virtual Vineyards (http://www.virtualvin.com) selling $10,000 of California wine each month, Xerox focusing on the home office market (http://www.xerox.com/soho.html), MCI and AT&T promoting their services. The number of businesses going on-line in 1995 has simply sky-rocketed. Services, too, are being successfully marketed on-line. Attorneys (for example, http://www.calweb.com/campbell) are purchasing Web pages so that when someone in Cleveland seeks a family law specialist in Sacramento to negotiate a custody dispute with an ex-spouse, the attorney with the Web ad will be called. Consultants and engineers, too, find the Internet an inexpensive way to help potential clients find them.

But what about your particular business? Will Internet advertising make you money? Strictly local businesses sometimes purchase an ad to keep their name before the public, but as yet, people aren't shopping for pizza over the Internet. Businesses marketing tangible products or services to a regional, national, or global market stand a better chance of attracting a large enough number of customers to make their investment worthwhile.

There is no sure bet when it comes to selecting advertising for a small business. It's a process of making relatively small investments with several media and then tracking the results.

WHAT DOES IT COST?
Fortunately, Web advertising requires only a relatively low investment. One "home page" with text, photographs, and graphics runs about $475 for 12 months, including Internet hosting fees, professional Web page design, registration of your site with over a dozen Web indexes, and monthly updating. When you compare that to the cost of one display ad in a national magazine, it begins to look like a great bargain. Larger sites with full services can be purchased for $995 for six pages or $2,395 for 20 pages. In addition, estimate Internet Service Provider fees of $35 to $55 per month, and domain registration of $100, plus set up fees. Beware, however, of the slick Internet salespeople who promise you the world. Radio ads heralding overnight riches on the Internet are literally too good to be true.

HOW DO I GET PAID?
But unless your Web site causes money to find its way into your cash register, it's just an ego-builder. So how does cash come to you? Purchases via credit card from commercial on-line services such as CompuServe, America Online, and Prodigy are perceived as safe, but by-and-large, fear of cyber-hackers has kept people from giving out their credit card numbers over the Internet. Never mind that they cheerfully dispense credit information via portable or cellular phone. Never mind that convenience store clerks can copy down your numbers from receipts while business is slow. It is the perception of vulnerability that counts.

Sensing new money flowing into their coffers, major credit card companies are working feverishly to put together accepted security standards for on-line commerce. MasterCard just announced it is joining with IBM, Netscape, GTE, and CyberCash to hammer out specifications. VISA has teamed with Microsoft for the same purpose. By the end of the year we can hope to see progress in Internet credit card sales. They're taking place right now, mind you; but when public confidence in Internet security is achieved, expect a dramatic up-turn in sales.

In the meantime, Internet storekeepers are making sales by inviting buyers to contact them with credit card numbers via telephone or fax. They sometimes offer on-line order forms which can be printed out by the customer and mailed in with a check. A few companies are experimenting with an on-line monetary system such as CyberCash or DigiCash, but this approach has attracted interest primarily in the few on-line "malls" where all the vendors agree to accept this as payment.

WILL MY BUSINESS MAKE MONEY ON THE INTERNET?
There's no way to know for sure which kind of advertising will work best for your business. You just have to experiment. Fortunately, the price of trying out Internet marketing is well within reach of most businesses. Don't expect to become successful with Web advertising alone. Instead see it as part of an overall advertising mix to attract customers to your business. But, by all means, give it a try. At the least, you'll be out a few hundred dollars; at most, on-line sales could become a major part of your income.