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Inventory Glut Points To Tough Times

"The signs are everywhere" that online advertising is in for some tough times, Tech Crunch's Erick Schonfeld says, especially the display market. Bellwether Yahoo this week reported a 2% decline in display ad revenues, while another major publisher, The New York Times, reported even worse declines.

The problem, of course, is a glut of display inventory. As Schonfeld says, the problem is so bad that Web sites are now actually showing fewer ads per page to reduce ad clutter and to keep ad rates from falling further. Meanwhile, comScore, in its 2008 Digital Year in Review, says that even though the number of display ads actually fell compared to a year ago, some 4.5 trillion ads were served to U.S. consumers last year. That amounts to about 2,000 ads per person per month.

Indeed, the display ad market is an over-saturated place. As Schonfeld says, "there is simply no need for the 300-plus ad networks out there." Accordingly, there's an ad network shakeout going on: stronger networks are picking up more funding and acquiring smaller competitors. For example, Glam Media bought AdaptiveAds just last night, while SocialMedia this morning raised $6 million and the mobile ad network AdMob raised $12.5 million.

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