The Post’s Holly Sanders notes the trend that scorched AOL, Yahoo, CNET, and other major online display-ad companies this quarter (i.e., everyone but Google): the wide availability of cheaper advertising inventory elsewhere. The trend is helping MySpace, Facebook, and the ad networks, which don’t have high prices to protect, while putting pressure on the big dogs.
On its face, this news sounds good for the smaller players: the “big three” aren’t so dominant anymore. In fact, the inventory glut will be tough on the smaller sites, too, as the lower prices will extend across the board. The situation is also reminiscent of the late 90s, when freely flowing venture capital created so much online inventory so fast that prices collapsed, driving a whole generation of start-ups out of business. The problem now is not VC money; it’s the ease with which new online media businesses can be established. But it will likely lead to the same result.
Ad inventory as far as you can see.