According to Yahoo! COO Dan Rosensweig, a "glut" of cheap ad space was partly to blame for his company's sagging third-quarter ad revenue, reports Adweek, by way of Yahoo News. 

The increase in cheap ad space appears driven by the recent popularity of social networks like MySpace and YouTube.  In September, MySpace drove more than 35.7 billion impressions according to Nielsen//NetRatings.  Despite the boost in impressions, the metrics company reported that unique visitors to MySpace dropped 4 percent.

In the ad networks space, providers are reporting double-digit gains in ad inventory. According to comScore Media Metrix, ValueClick's reach is up 11 percent in the past six months and BlueLithium's 22 percent.

"This is going to change the market dynamics," says Dan Rosensweig, Yahoo! Inc. COO.

In related news, Yahoo recently acquired AdInterax, a New York-based provider of rich media technology.  The portal also acquired a 20 percent stake in Right Media, operator of an open media exchange.