According to advertising industry sources, big players like indiainfo.com, 123india.com and rediff.com have slashed their ad rates, with others like webshastra.com, indiaimpressions.com, media2india, intercept.com and rightserve.com too joining in. These companies were not available for comment.

The drop in ad rates speaks volumes about the struggle for survival in the highly competitive dotcom world. The move is aimed at gaining market share, mind share and new businesses.

As competition is just a click away, the trend of reducing ad rates is gaining momentum in the virtual world, says Euro RSCG Interactive CEO Probir Roy. "In India, Internet advertising market is still at a nascent stage. There could be short-term benefits, if you opt for predatory prices. But you cannot predict the long-term impacts. To woo advertisers, many portals are shooting themselves in the foot, I would say," adds Roy.

In the physical world, ad rates are fixed in print advertising, while the final ad sales differ from company to company in the electronic medium, ie. television. "We have INS, which provides fixed ad rates for print advertising. In Net advertising, as the market is slowly growing, we do not have rate cards," adds Roy.

According to Rohinton Maloo, chief executive officer of Brandwidth, a well-known online advertising agency says: "It's, in fact, an unhealthy competition if you undercut others' ad rates. A few months ago, the online ad rate was around Rs 600 for 1000 impressions. And now, the rate has fallen to Rs 150 for 1000. Clearly, survival is the issue here."

Echoing similar views on the issue, TBWA Anthem director Kurien Mathews says that many small players in the virtual world are desperate to get business. "To survive, these companies have started offering rock-bottom prices. Many portals do not have numbers (browserships) to show. Therefore, they opt for shortcuts to get business," reasons Mathews. According to Mathews, netvertising (as Net advertising is called in the new medium) has not really taken off in India. "It will take another six months to gain momentum," adds Mathews. This phenomenon of fewer ad accounts and greater dotcom space is said to have led to the fall in ad rates.

In sharp contrast to this argument, Maloo says that many large dotcom companies have recently reduced their ad rates to woo advertisers. "Recently, many big players have also slashed their ad rates to get a pie in the sky. Today, advertising is the only source of revenue for most portals. Since there is no third party to do the validation, anyone can write the new rules," explains Mr Maloo.

Indya.com CEO Sunil Lulla says change is imminent as the Net medium is a growing one. "Currently, the rates vary mainly depending on the traffic to the site and its popularity. Naturally, sites like hotmail command a high premium," says Lulla.

According to contest2win.com chief executive officer Alok Kejriwal, banner advertising has not really taken off in India. "What's the big idea of selling something at a reduced price, when no one had bought them in the first place? In fact, these companies are flogging a dead horse," argues Mr Kejriwal.

According to a Hindustan Thompson Survey, in India, the total ad spend online in 1999 was Rs 8 crore. But according to projections, the figure would jump to Rs 175-200 crore in 2003. "This year, the total adspend will touch Rs 50 crore. Even after dropping ad rates, these players may not get business. Because 80 per cent of online ad revenue go to 10 popular sites in India," says Neeraj Roy of Hungama.com.

According to Roy, the accent is now on `solution-based online advertising' as posed against plain vanilla banners. But banner advertising account for over 95 per cent of the total online advertising market.