Web Ads' New Spin

"Demand is increasing significantly," says Wenda Harris Millard, Yahoo!'s chief sales officer. "It's because there are more advertisers spending more money so it's far more competitive."

Google, the largest search engine, is eager to capture more brand advertising dollars. The company has recently added new features, such as business news, to entice readers to stay on the site longer in hopes of attracting companies buying display ads. More details on Google's plans should be unveiled at its upcoming press day.

The huge increase in Web ad prices isn't just helping Yahoo!. Sites of the top newspaper publishers, which are struggling to retain print readers, are sold out, says Colby Atwood, a senior analyst with Borrell Associates.

Brand advertising can be far more profitable for Web companies than search, since they can charge higher prices for it. This is why Google is trying to expand beyond search by offering new features such as business news. More details of Google's plans to capture more brand dollars are expected at this week's press day.

"The good-quality inventory is indeed tighter," says WR Hambrecht analyst Denise Garcia. "It does put more pressure on the advertisers. It requires them to lock in their prices at an earlier date."

Agencies such as aQuantive (AQNT Quote) are encouraging their clients to look into other sites to reach the same audience.

"We're not having trouble getting inventory and getting inventory for our customers," says Brian McAndrews, chief executive of aQuantive, which on Monday posted first-quarter earnings that beat Wall Street estimates.