A few of Internet gurus say that you can make money on Internet without a web site. They say just use autoresponders and safelist advertising. And there may be a few doing this successfully.
However, vast majority of people making a living on Internet have their own web site. It is much harder to build a long-term business without having a web site hosted on your own domain
A website should be considered a home base so to speak. It is your online store location and base of operations for everything else that you do online.
Let's think about different online advertising methods. Some of main ones are search engines, banner advertising, ezine advertising, newsgroup/mailing list participation, and classified advertising. I know that doesn't cover everything, but It is major source of advertising online. Think about each of those advertising methods.
Search engines are #1 traffic generator on web right now and they absolutely require that you have a website. Many online experts estimate 95% of your traffic could come from search engines. You are leaving out 95% of your business by not being able to take advantage of search engines...
You may think that just getting a free server such as FreeYellow or Angelfire might take care of this problem, but it doesn't. Both of above mentioned web hosts are being blocked out of some of search engines such as Infoseek. You can still place them on most of search engines, but registering web pages from them is becoming extremely difficult.
With banner advertising you have to have a website, both for free banner exchanges and for paid banner advertising.
With ezine advertising, you can use an autoresponder, but your response rate goes up when you include both an autoresponder and a website in classified ad. The same rules go for classified advertising. You should have both an email address and website in your ads for maximum effectiveness.
When participating in online discussion, best form of advertising is signature file. This gives you space for a short 4 - 5 line ad for yourself. The best approach is to tell them your name, phone, email, and website address along with a basic idea of what you do. Your website address needs to be there so that they can go somewhere to find out more information immediately.
In all of these advertising forms, a website or domain is absolutely essential to your success. I personally favor a domain for many reasons...
Name Recognition - It is much easier for people to remember a name like http://www.yourdomain.com than http://www.freesite.com/members2/somename/
Stability - Having your own domain gives an image of more stability to people when they see it. It appears that you will be around for a while.
Secure Ordering - In most cases you cannot get orders online through a website because there are no secure ordering options.
Growth - It will be much easier to grow when you own your own domain. If you have just a website and you run out of space or you start having trouble with your host, you are stuck. If you leave, all of traffic you built will be going to Freesite, not your new domain. If you own your own domain, if you move everything comes with you to your new host.
Selling Multiple Products - This hooks up with above, but it needs to be mentioned again. A domain is perfect for adding more products to and selling more items. You spend money and/or time to get traffic to your site. You need to make sure you are taking advantage of it as much as possible by offering multiple products and/or services.
All of these benefits are extremely important to making your online marketing a success. I honestly think everyone should purchase a domain up front in their online marketing and then start driving traffic to it immediately, instead of wasting their time and money by losing their traffic that they worked so hard for when they upgrade later.