Tuesday, January 25, 2005

Growing demand for online news pages

What do you do if you're a big media company looking to expand your online presence? You could employ more people to produce more stories. Or you could look around the marketplace and size up compatible online publications for purchase.

A looming crunch issue for some sites is a revenue squeeze that's partly a result of their own success. According to the New York Times (reg rq'd) news and information web sites are back in town.

The problem is that advertisers want prime page positions, but the available inventory of pages is in limited supply. On the spectrum of problems for online publishers this is up the friendlier end of the scale, but nevertheless it's real.

So bidding wars are happening over businesses that only a short time ago were seen as undesirable.

"Online advertising is expected reach $9.7 billion in 2004, or about 3.7 percent of United States advertising spending, according to a recent Merrill Lynch report. Still, that number is expected to grow 19 percent this year as the nation's largest advertisers shift budgets from print and network television to cable and the Internet, the report said.

As a result, publishers are being forced to confront a potential advertising inventory crunch. There is no physical limitation to the number of Web pages, of course, but advertisers want to be placed on the most popular pages and those which cater to their most profitable audiences. And those kind of pages are in shorter supply. "

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