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Internet advertising is bouncing back, yes. But the outlook for Internet advertising stocks isn't quite so clear.

Thanks in part to positive data trickling out of industry leaders like

Yahoo!

(YHOO)

and

Time Warner's

(TWX)

America Online, it makes sense for investors to take a closer look at the smaller players in the online ad business.

But just as the explosive growth in Internet usage didn't translate into success for numerous Internet-focused companies at the turn of the century, the specific situations of different online advertising companies -- chiefly, the different segments of the online ad industry in which they operate -- translate into no overall discernable pattern of success.

"Yes, they're all related to online advertising, but by no means are they all comparable to one another," says Derek Brown, an analyst at Pacific Growth Equities. The rising tide in Internet advertising, says Brown, "is not lifting all boats, nor should it."

Smaller Shops

At issue are the stocks of smaller players in the Internet ad business.

Ask Jeeves

(ASKJ)

,

FindWhat.com

(FWHT)

TheStreet Recommends

and

LookSmart

(LOOK)

, for example, operate in the fast-growing search engine advertising sector. There they find themselves in the shadow of Overture Services, recently purchased by Yahoo!, and the privately held Google, which, according to various recent press reports is preparing to go public and has rebuffed acquisition efforts by

Microsoft

(MSFT) - Get Microsoft Corporation Report

.

Other companies in the online ad business that are vying for investor attention are

aQuantive

(AQNT)

,

DoubleClick

(DCLK)

,

ValueClick

(VCLK)

and

24/7 Real Media

(TFSM)

.

To be sure, all these companies can crow simply about their ability to survive, since numerous other publicly traded online marketing companies didn't make it past the dot-com bust, and some of these have endured their own near-death experiences. But they still have to face threats such as cutthroat competition and concentration of power among customers and partners.

On the bright side, the view from the top of the heap is good. Yahoo!, for example, reported that for the third quarter ended Sept. 30, its overall advertising revenue -- fueled by search and traditional online advertising --

jumped 48% from the corresponding figure one year earlier. That branded advertising, such as large online display ads, grew 20%, the company said.

"The macro trends you're referring to are certainly very real," says Jeff Lanctot, vice president of media at aQuantive's Avenue A subsidiary. Traditional advertisers, he said, are getting more aggressive about using large, high-impact branded advertising, he says, which is increasing supply-vs.-demand equilibrium in what has, in recent memory, been a buyer's market. With the youth market embracing online advertising, "this momentum is not going to die out anytime soon," he says.

Among the online advertising companies Brown follows, the only one he has an overweight rating on now is aQuantive, which he calls "a very good proxy for some of the trends seen online" -- trends such as an increase in the number of clients, an increase in spending per client, and an improving quality of client. The company operates two full-service interactive marketing companies, Avenue A and i-Frontier, as well as an ad technology business.

A legitimate risk facing aQuantive, says Brown, is client turnover and concentration. (Illustrating that risk, the company lost a top-five client,

AT&T Wireless

(AWE)

, in the third quarter.)

But that traditional ad agency risk doesn't faze Brown. "Based on their track record over the last several quarters," he says, "they seem more likely to add clients on a net basis than to lose clients." Brown's firm hasn't done banking for aQuantive.

Price Pressure

Not all trends are positive ones in Internet advertising. For example, both aQuantive and DoubleClick, in their recent earnings calls, indicated that there is pricing pressure for their ad-serving business. At DoubleClick, that helped translate into a revenue decline in businesses that amounted to 41% of DoubleClick's sales in the third quarter. Further complicating DoubleClick's role in the online advertising sector is the fact that 42% of its revenue comes from a marketing data business related chiefly to mail-order catalogs. One possible reason DoubleClick falls into the "online advertising" category is its corporate history, since it was a pioneer in the online ad sales; the company no longer is in the ad sales business.

In determining whether macro trends are trickling down to smaller companies, Blaylock & Partners analyst Mark Zadell says, "It's important from a tracking perspective to monitor revenue growth, and how that revenue growth is translating into profitability."

Adds Zadell, "Especially with smaller-cap stocks, it's important to focus on management and their vision of where the industry is going. ... One should make sure one is comfortable with how management is positioning the company strategically."

On both these criteria, Zadell speaks positively of aQuantive and ValueClick, which sells advertising and online marketing tools, notably in the area of affiliate marketing. Zadell rates aQuantive hold and ValueClick buy; his firm hasn't done banking for either company.

Revenue growth across the board has been good for both companies, says Zadell. And on the subject of management vision, he speaks positively of aQuantive's efforts in helping traditional media buyers to measure the effectiveness of online spending, and of ValueClick's completed acquisition of a search business and its pending acquisition of an affiliate marketing company. These deals, says Zadell, "suggest that they're on the right track and doing the right thing."