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Companies around the world will spend a record US$31 billion ($41.3 billion) this year to advertise everything from toothpaste to home loans on the internet, supporting countless news sites, social networks, video exchanges and blogs.
But some media veterans worry that expectations for online advertising may be getting out-sized.
Increasingly, they say, too much media depends on advertising as the only source of revenue. With new players from software makers to cable operators also trying to cash in, the dollars simply may not stretch far enough.
"I'm getting to the point where I feel like every answer to every business development pitch is, 'We're going to be advertiser supported'," said Beth Comstock, president of Integrated Media at NBC Universal, which this year set up a fund to invest in media and digital companies.
"It's just not going to be possible," she said at a recent advertising conference. "There are not going to be enough advertising dollars in the marketplace, no matter how clever we are, no matter what the format is."
NBC Universal's television networks, cable channels and websites compete for advertising dollars with everything from niche blogs to big media peers like Time Warner and Walt Disney. In addition, fast-growing internet companies like Google are snatching up advertising budgets.
But new rivals are entering the market. Comcast, the largest US cable operator, expects at least US$1 billion in online advertising in the next five to six years.
Verizon Communications and AT&T are looking at advertising opportunities on their video and wireless services, while start-ups like social network Facebook are seen as a new frontier for web marketing.
Even Microsoft has made a bold move into advertising in buying web-marketing firm aQuantive.
Until recently, the focus was squarely on how much money is moving into online advertising, rather than whether too many companies are trying for it.
There is little doubt today that a hefty portion of advertising dollars will shift to the internet from TV, radio, print and elsewhere in the coming years. ZenithOptimedia forecasts online ads worldwide will rise 28 per cent this year, while the rest of the market grows at 3.7 per cent.
Next year, ZenithOptimedia forecasts it to rise 21 per cent, and climb another 13 per cent to US$43 billion in 2009.
At that point, web advertising would represent almost 10 per cent of the US$495 billion spent on advertising worldwide - yet would trail spending on newspapers, magazines and television.
"There are billion of dollars that can still move," said Craig Lambert, chief digital director of Colangelo, an integrated marketing agency based in Connecticut.
"Is there enough money flowing to support the businesses out there? I'd guess there is, just because there's so much money that has always been spent on TV and print."
Others also said there should be enough advertising money to spread around.
Jeff Brooks, chief executive of digital and direct marketing agency Euro RSCG 4D, sees a "huge gap" between the amount of time people spend on digital media and the amount of advertising money it attracts.
"The thrust of ad spending online, while dramatic in its growth quarter over quarter, still represents a disproportionately small percentage of total advertising dollars," he said.
The catch, according to some, is that much of the money flowing towards the internet is concentrated on a few dozen of the most popular sites. That has left smaller, less well-known sites at a severe disadvantage when it comes to attracting advertising money and surviving.
In the United States, the top 50 websites accounted for more than 90 per cent of the revenue from online ads in the first half of the year, said the Interactive Advertising Bureau and PricewaterhouseCoopers. The top 10 sites accounted for 70 per cent.
And the number of websites continues to grow, creating more competition for audiences - and advertisers - who can also choose from a huge range of media entertainment.
"It's not like the old days, when it was 'if you build it, they will come'," said Jonathan Sackett, chief digital officer at Boston-based ad agency Arnold Worldwide. "Now if you build it, they probably won't."
One alternative for websites would be to bank on subscriptions rather than advertising revenue, but few existing outlets have been successful with that model.
That's because unless the site offers extraordinary content, people simply refuse to pay for it, says Mark Miller, president of advertising and marketing agency RMG Connect.
"If Warren Buffett wanted to put out his own subscription newsletter online, well, I'm sure he'd get a bucketful of people to subscribe to it." *
