If you’re not on-line yet, you will be soon. That’s the finding of a recent study commissioned by Prodigy Biz Corp., which found that one-third of U.S. small businesses were on-line. The smallest organizations were the least likely to have taken the plunge. Only one in four companies with fewer than 10 employees reported that it had an Internet presence, while half of those with 10 or more employees were on-line already.

Nearly 75% of small companies reported that cost was not a barrier for getting onto the Web. The survey results ranked reasons for going on-line as follows: promoting to prospects (69%); doing E-commerce (57%); providing better customer service (48%); competing with other businesses (46%); and communicating with employees (11%).

Of course, few small businesses suggested that doing business on the Internet was easy. More than 40% of the small-business owners surveyed claimed that they did not have the staff or the time to maintain a Web site. And 66% didn’t believe that the Web offered them significant growth opportunities, because they are local businesses.

Such quibbling aside, many off-line small businesses planned to get on-line in the near future. Some 40% of businesses that didn’t have Web sites — approximately 2.1 million — said they would be on-line soon. The study was conducted by International Communications Research. –Mike Hofman

Four years ago Jayesh Patel, managing partner of the Los Angeles law firm Parker Mills & Patel, hung his firm’s shingle out on the Web. Although Patel intended to communicate to the firm’s base of big-ticket customers, the overwhelming response to the site has been from prison inmates, who write or call collect in search of a lawyer. “We don’t know what to do about it,” Patel says. “We can’t sort of boldly put on our Web page ‘Prison inmates, please don’t bother us.”

His misconception, he says, was expecting the Web audience to be much like his client base: professionals in management positions with a good income. “The audience is far, far bigger than we would have predicted.” –Emily Barker

“I like banner advertising,” says Vincent J. Schiavone, CEO of 4anything.com, a three-year-old Web business based in Wayne, Pa.

A recent Andersen Consulting study concurs, concluding that experienced U.S. Web users are more likely to buy on-line from a company after exposure to banner ads than they are after exposure to traditional advertising. Schiavone has found that banner ads are actually a great way to promote the thousands of sites that his 100-person company produces.

The CEO reports that he can buy ads on portal sites for as little as $2 per thousand page views. And since companies that sell, for example, lacrosse sticks are willing to pay a decent price to advertise on 4Lacrosse.com, Schiavone can mark up his banner-ad pricing. “The economics work for us on both ends,” he says. –M.H.

Attention, dot-coms: your mountains of venture capital no longer guarantee you special treatment in the ad world. Scheyer/SF Inc., a boutique ad agency in San Francisco that handles accounts like EMusic.com, demands 50% of a campaign’s cost up front. “If the check isn’t in our hands, we do not do the work,” says agency president and founder Dennis Scheyer.

He adds that ad costs are skyrocketing. Demand for airtime is so strong that when companies cancel an ad, TV and radio stations resell that time to another company at a higher rate. He points to one local radio station that a few years ago would have charged $500 for a 60-second spot. Now the price is $5,000.

One more thing. Once the spot is contracted, dot-coms often have to guarantee it immediately and with cash. Call it the ad industry’s version of due diligence. No one’s waiting to see who wins and who loses in the dot-com game. –Anne Marie Borrego

THE 7 MYTHS OF THE WEB ECONOMY

Myth 1:

• Building a Web site is easy ^[1]
• The word from the experts ^[2]

Myth 2:

• Traffic will make you rich ^[3]
• The word from the experts ^[4]

Myth 3:

• Smart money makes you smart ^[5]
• The word from the experts ^[6]

Myth 4:

• Razzle-dazzle makes Web sites great ^[7]
• The word from the experts ^[8]

Myth 5:

• Brand is everything ^[9]
• The word from the experts ^[10]

Myth 6:

• Wild ads make Web stars ^[11]
• The word from the experts ^[12]

Myth 7:

• Community, community, community ^[13]
• The word from the experts ^[14]

Plus:

• Tales my guru told me ^[15]
• Dispatches from the Web economy ^[16]

Back to Intro, ” I Was Seduced by the Web Economy” ^[17]