Competition in advertising

In most economic relationships, there is are providers, consumers, and sometimes "middle-men". When providers compete, its good news for consumers, and vice versa. Sometimes the competitive battles become very heated, particularly when providers see a lot of profit available from the consumers. It's not as usual for the middle men to compete strongly, probably because they benefit from either side raising the stakes.

We may be starting to see some real competition brewing in the web advertising arena. Google's Adsense and Adwords programs were the de facto standard for small websites, but that supremacy has been challenged by Yahoo, Chitika, and others. There's no doubt that Google has lost both advertisers and web sites because of this, and they have begun to react by offering new services and new features to both advertisers and web site owners running Adsense.

The competition would probably be much more if the ad market itself were not so weak. Adwords advertisers aren't competing strongly with each other, so click value usually isn't very high - there are exceptions, but most ad campaigns are paying vary little.

Even so, free offerings like Google Analytics and improved feedback from Sitemaps are attempts to woo advertisers and web site owners back into Google's arms. The competitors haven't reacted yet, and may not be able to match Google's bids, but they won't just give up, so we can expect to see more activity. That's good news for us.

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