When advertising rates on the Internet began their long slide downward after the turn of the century, some may have wondered if they'd ever rebound. Was it all just a big fad? Most of us, however, believed the nascent industry would prove to be cyclical like traditional television and print advertising, and that the slide was just part of many boom-bust cycles to come.

A story in today's Wall Street Journal seems to support that assumption, reporting that Internet ad sales are up 14% for the first half of this year compared to the same period in 2002. But more important may be the fact that "big advertisers are showing renewed interest in touting their wares on the Web."

The article holds up such giants as Procter & Gamble (NYSE:PG) and General Motors (NYSE:GM) as examples. The former has found the Web to be fertile ground for reaching teens, and the latter advertises on eBay (NASDAQ:EBAY) Motors in order to nudge car buyers to its own site.

Also fueling the recovery is the popularity of the pay-per-click advertising model championed by Overture (NASDAQ:OVER), which directly helps Yahoo! (NASDAQ:YHOO) and Microsoft's (NASDAQ:MSFT) MSN, among others. One of the few companies not benefiting from the rebound is AOL Time Warner (NYSE:AOL). Consistent with what we first reported last year, its America Online division is still suffering from the non-renewal of many long-term contracts that buffered it when other ad-supported businesses were dropping like flies.

The advertising industry traditionally does well in the early expansion stage of an economic cycle. If you believe we're in such a period -- characterized by such things as low but increasing inflation and interest rates, and large amounts of unused capacity by manufacturers -- then today's news is a positive indicator of better times ahead.

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