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	ASIAWEEK
	Intelligence The story behind today's news from the editors of Asiaweek

Take a look at what's happening in the online advertising world, where myriad online ad providers are consolidating into 3 to 4 major players, jockeying for the rich promise of online advertising. The biggies poised for acquisition are the ones first and best positioned in the market. Like Chris Justice's Asiacontent.com, the family of pop culture sites like MTV Asia, and E! Online that Goldman Sachs took to the NASDAQ in April. That float has been one of Asia's biggest flops. The shares went out to investors at $14 and are now trading at $3. Ouch!

Justice has a tie up with Kevin O'Connor's giant DoubleClick, which got into strife in the U.S. recently for violating user privacy codes, to set up DoubleClick Asia. Asiacontent's shares may not be alluring, but the company banked $70 million from its IPO that it can shop with. Another big player in Asian advertising is China.com, which tied up with the 24-7 group. China.com recently put a marker down by teaming up with Sydney-based BMC Media, which has developed an Asia presence. China.com paid $5 million for a 6% stake in BMC Media. Had the deal been done 6 months ago, it would have cost at least three times as much.

Sitting out there without an in-house advertising partner is Hong Kong's Richard Li, who has invested heavily on the content side of the Net but still lacks the vertical connection to drive ad revenue to sites like Network of the World. Li teamed up last year with the big U.S. incubator CMGI to make Asian versions of U.S. online ad specialists Adsmart/Engage Technologies. That deal drove up the share prices of all concerned -- this was in those crazy pre-tech wreck times -- but 9 months later, an eternity in Internet time, there's little evidence that Adsmart/Engage have made any progress with their joint venture. Going its own way is Hong Kong-based Space Asia, which uses Engage Technology under license but has so far pursued an independent course and has not hooked up with a content play like China.com and Asiacontent.

These companies are at the top of a pile of myriad players all chasing a piece of the same pie, a pie that the International Data Corporation, which tracks online activity, says will grow to more than $1 billion by 2004. Given that revenues in Hong Kong, one of Asia's leading ad markets, were barely $18 million last year, that seems an ambitious forecast. And with the CPM rate -- the cost to advertisers of page impressions per thousand -- being driven down from $25-30 last year to $10-15 today, Internet penetration and e-commerce has to rise even more phenomenally than is expected to get anywhere near those numbers.

What's happening in the ad world will also happen in the content world, probably moreso when you consider that in places like Hong Kong, some 75% of ad revenue is being channeled to just 5 portal sites. And for the foreseeable future there are plenty more content sites operating on advertising business models than there are advertisers. Only the strongest will survive. Expect big-time consolidation. Or a bloodbath.

Eric Ellis is the Southeast Asia and Technology Editor of the regional finance portal AsiaWise.com

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