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Traffic Will Make You Rich: The Word from the Experts

Sales, not traffic, are what's needed to create profit for a Web site, according to the experts.
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Myth 2: Traffic will make you rich

REALITY CHECK: Selling well makes you rich. Traffic only provides eyeballs

Cramer: Revenues are what will define things in the end, but people live and die by the Media Metrix site-traffic reports. Wall Street is obsessed with them. I swear to God, if you want to make big money in the stock market, go to Springfield High outside Philadelphia. Get a bunch of kids and say, "Surf this site all day long, and I'll give you 20 Gs." You'll generate a huge amount of page views, which is what wins in the market today.

Johnson: Sites like Blue Mountain Arts' E-greeting-card site succeed because they provide something that attracts people, and in the Internet world that's a useful model. It may make business-school people scratch their heads, but traffic to a portal gets a person to hit some other channel buttons and use other content.

Morgan: A lot of companies, like Blue Mountain Arts, are specifically aggregating an audience, and they'll figure out what to do with it later. The question is whether an audience used to doing things for free will ever pay for them.

Randall: There is a common belief that you should basically spend an infinite amount of money to promote your site. What you're starting to see is that at the end of the day, you have to have a real business model.

Rich: Bottom line: you've got to have users and customers. Driving visitors to a site is not a guarantee for a viable business.


THE TRUTHMONGERS

To help us deconstruct the myths of the Web, we turned to expert observers of the Internet phenomenon. Their comments can be found after each of the case studies we presented. Here are their credentials:

Martin Anderson , management professor at Babson College, in Wellesley, Mass., advises executives who are transforming their traditional companies into "click and mortar" businesses.

James J. Cramer is the brash cofounder of and columnist at TheStreet.com. He has built successful careers as both a journalist/pundit and a hedge-fund manager.

Kathleen Eisenhardt is a professor specializing in competitive strategy at Stanford's School of Engineering. She recently coauthored Competing on the Edge: Strategy as Structured Chaos.

Chip Hazard is a general partner and E-commerce specialist at the venture powerhouse Greylock, in Boston. He helped launch the e-Steel exchange.

Tod Johnson , chairman and CEO of Media Metrix Inc., based in New York City, is a widely recognized expert on brand loyalty.

Ted Leonsis is president of AOL Interactive Properties Group. In his first three years at America Online (starting in 1994), it grew from about $100 million in revenues to $1.5 billion.

Kelly Mooney is director of intelligence at Resource Marketing Inc., a technology-marketing firm in Columbus, Ohio. She has helped companies such as Victoria's Secret develop their on-line strategies.

Allen Morgan is a general partner at Mayfield Fund, in Menlo Park, Calif. He has been involved in more than 350 venture-capital investments and public offerings.

Bo Peabody is a cofounder of Tripod Inc. and vice-president of network strategy at Lycos Inc. When he was still in college, Peabody founded Tripod, which helps people build their own home pages. In 1998 he sold the company to Lycos.

Scott Randall is founder and CEO of Internet-auction hosting service FairMarket Inc. Randall has been involved in E-commerce since 1995, when he launched an on-line store. He has been president of the Internet Shopping Network and Yahoo Marketplace.

David Rich is vice-president of marketing and brand guru at Bigstep.com, which provides on-line services to small businesses. He previously orchestrated brand campaigns for Walt Disney, Pepsi, and Jamba Juice.


THE 7 MYTHS OF THE WEB ECONOMY

Myth 1:

Myth 2:

Myth 3:

Myth 4:

Myth 5:

Myth 6:

Myth 7:

Plus:

Back to Intro, " I Was Seduced by the Web Economy"




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