John,
I approched the same question about a year ago and decided to take the attitude that my station was just another local station but fed over the net instead of the air.
As we all know but fail to remember, content is king. I come from 40 years in radio so I know the way to sell on- air radio but was worried about how advertisers would see internet only. It turns out I needn't worry. My first test was selling a live audio stream of the local high school boys basketball games play by play. . originated just like over-air radio, a dial in feed over the phone using a automatic coupler on the "studio" end to connect me to the stream ( ya ya could have done it with skype etc but I had all this old equipment stored away so I did it old school ) .
I discovered that potential sponsors were way ahead of the game and out of maybe 30 I talked with only one even brought up the fact it was net only. I did the play by play, billed the customer and collected some good cash for basicly a one man show. People came up to me at the games and thanks me for the stream which they had listened to when they couldn't make it out.
I also picked up local semi pro teams for awhile off their streams and rebroadcast them on mine. Got really good spikes in my anyalitics during those game. So I guess the bottom line is, do it like we always did it,,,it's still radio just gets to listeners differently. It takes a face to face salesman pounding the street,,don't wait for someone to e mail you and order go out and get it!