During the dot.com frenzy when enthusiastic upstarts with catchy names and glitzy gimmicks hoped to blaze a trail to riches and everyone from venture capitalists to John Q. Investor were afflicted with dot.com fever. Yahoo! Inc. managed to pull off one of the most ambitious business strategies. It amassed an eclectic range of online services and built a huge audience that it could sell to advertisers. At the time, advertising on Yahoo! gave start-ups the credibility they needed in the industry and on Wall Street.

But Yahoo!, which was the equivalent of advertising on a national television network, has lost its clout and Web advertisers are all now clear that they’re not getting what they hoped for. Moreover, such other competitors as Amazon.com have also declined and Web advertising now occupies a precarious niche.

That, however, is not all. Many black-owned Internet companies have suffered even more in the past twelve months. Some black and urban Web sites had to make the hard decision to partner with major corporations or close up shop. 

BlackFamilies.com and Onelevel.com, for example, were forced to shut down operations. Russell Simmons had to complete a deal with BET.com to keep his three-month-old company, 360hiphop, from folding. Another dot.com, DME Holdings Inc., which is one of the first black publicly traded Internet firms, was crippled by a severe cash crunch. Others such as NetNoir, BlackVoices.com and BET.com had to strike deals with major corporations to keep afloat. Because of the turmoil in dot.coms, many are now questioning the wisdom of investing in the dot.com world.

But analysts say that this is a natural evolutionary process, similar to what took place in the women’s market about a year ago and among general market entertainment sites today.

“It’s a normal process,” said E. David Ellington, NetNoir’s chairman. “There were too many sites that launched without developing a realistic business model.” 

Overall, the reasons for failing Web sites are a lack of a viable revenue model, a lack of a target audience and a lack of marketing intelligence. With online competition so fierce, having a glitzy site with phenomenal graphics and content is not enough. Profits are what matters.

“If a site isn’t getting banner advertising or building revenue, it’ll have to close shop once the investment dollars run out,” said Robert Rucker, co-founder of BlackWebPortal.com, a business-to- business marketplace for black-owned businesses. 

The question, however, remains. Is Web advertising the way to go? Advertisers have estimated that the percentage of people who click on Web banners has fallen from about 5 percent to a minuscule of about 0.5 percent.

“Most people are tired of banners and pretty much ignore them,” said George Rodriques, president and co-founder of Graphic Vision, (www.gvmedia.com) a Brooklyn-based Web design company.

Advertisers tend to benefit more from banner ads than Web site companies, according to Rodriques. The advertiser pays the Web site about five cents for every click-through and two cents for every impression. The Web site gets paid per hit but the advertiser may get a sale from that hit. In essence, therefore, advertisers make more money from a single ad. Moreover, it all comes down to traffic. If a site doesn’t have enough hits, advertisers are not going to advertise on it. 

Rodriques said that Web-based companies, especially smaller ones, should try to get sponsors because sponsorship is more effective than Web banners.  “This way they can charge a flat rate and the money is guaranteed unlike in click-throughs,” Rodriques said.

“I think people who have great expectations of banner advertisements are those who tend to rely on a single form of advertising,” said Willie Pompey’Kulia, founder of the Association of African American Web Developers. “Generally, the results are not that high and they are disappointed.”

Pompey’ Kulia uses a combination of banner advertisements and sponsorships, usually banner exchange programs on his site, Adirondak Web design.

Now that the Internet frenzy has reached its apex, it is clear that the “get-rich-quick” mentality is also being eliminated.

Many dot.coms have learned from their predecessors and are taking steps to avoid a short life span. BlackVoices.com, for example, recently sealed a three-year $10 million to $15 million deal with General Motors Corp., whereby GM will make e-commerce available to BlackVoices.com, which will in turn provide a wider, more affluent market to GM. 

Another recent teamup is hip-hop’s Hookt.com with Sean “Puffy” Combs. Hookt.com will advertise Comb’s Sean John clothing line and his artists’ music. Combs will gain equity stake in the Hookt.com and serve as a member of the dot.com’s advisory board. 

Yahoo! Inc. is moving away from over-reliance on ad revenue by introducing such new services as hosting online stores, conference calls and streaming audio Webcasts. 

Anil Singh, Yahoo! Inc.’s sales chief said that other initiatives include a free Internet service and a new corporate Yahoo! platform. Yahoo! is also moving into the business-to-business market by persuading companies to integrate Yahoo!’s portal into their internal Web networks.

All in all, the key survival tactics for emerging dot.coms will be to develop concrete long-term business plans, creative marketing strategies and identify target audiences. A dot.com should be able to reinvent itself, evolve along with technology and find new and inventive ways to market itself and generate revenues.

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