According to the most recent AdKnowledge study for 3Q 2000, the number of sites and ad networks seeking advertising has grown by 35 percent over the three-month period. The study also states that the Internet ad industry is maturing and prices are beginning to stabilize. With a huge proportion of sites and networks sharing very similar demographics, it is only normal that price, as is often the case, will be the parameter that will drive the market toward equilibrium. This is unless the market magically recovers and companies go back to blowing their budgets any- and everywhere. But we all know this is an unrealistic prediction.
Competition continues to increase, with new options for advertisers arising all the time.
Prices have not yet settled and still have a way to go until that break-even point is established. On the other hand, one factor that should help stabilize ad prices online is the current trend of traditional advertisers adding a small number of online placements to their media mix. With increasingly more traditional retailers, multinationals, government parties, and small businesses starting to include interactive media as part of their overall marketing strategies, a larger, more consistent flow of dollars should continue to be allocated to web advertising. This should help drive demand, although keeping pace with a snowballing supply of ad inventory is still going to be very hard. No doubt, the shakeout still has some way to go.