Three major events occurred over the past couple of weeks. The first was the announcement that advertising rates have shot up at an incredible rate. On-line advertising revenue in the US last year exceeded $9.6 billion, up almost 33% on 2003 and beating the previous revenue record in 2000 by nearly 20%, according to a report released by the Interactive Advertising Bureau and Price Waterhouse Coopers.

Forrester upped the ante, estimating that total US online advertising and marketing spending this year will reach $14.7 billion.

The second major event was that Gaming Corporation PLC announced that it was buying Gambling.com, the search portal for online gaming sites for approximately $20million. Gaming Corp said it would pay $15.3m in cash and $4.7m in new shares for Newbold, owner of Gambling.com.

And who can forget when CryptoLogic bought WinnerOnline.com some years ago, or that FUN Technologies just bought DonBest.com?

Finally, Men's lifestyle magazine Esquire was recently hit by an onslaught of subpoenas in response to their publication of online poker advertisements for online sportsbook and gaming company Bodog. Subpoenas were sent to Esquire's publisher, Kevin O'Malley in addition to a number of magazine staff members. Pulling the ads would translate into major financial losses for Esquire. The magazine began advertising for online gambling companies in the first place, in order to buffer a three-year drop in the number of ad pages

What do these three events have in common?

It’s simple. The costs of advertising online are rising, gaming advertising portals are worth a premium and offline advertising opportunities continue to shrink. Since iGaming depends so heavily on marketing, we should expect to see some margins shrivel for some operators.

Those corporations who have invested wisely in purchasing or building secondary advertising revenue sources have set themselves up to withstand the increase in the costs of online advertising. Not only can they brand themselves for a reduced cost on their own portals, but they can charge a premium to other operators who desperately are looking for ad placement.

Last week I spoke of a 30% growth in the iGaming Industry. And I stand by it. It’s just a matter of figuring out which of the Companies in that space will benefit directly from secondary revenues, and which ones will lose out.

Patrick Smyth is the CEO of Gaming Transactions Inc. (NASD GGTS.PK) and the President of CYOP Systems International Inc. (NASD CYOS.OB) He has been involved in the online skill games and online casino industries since the mid nineties and been involved in the launch and marketing of over 100 gaming sites. He is a featured speaker at gaming conferences and is also a contributing author to the International Game Developers Association. The views and opinions expressed are those of the author only.