• by Laurie Sullivan  @lauriesullivan, December 16, 2009

As the economy recovers and advertising budgets start to increase in 2010, the ad industry will continue to see a shift in dollars spent from offline traditional advertising on to online, such as display, search and rich media.

While that alone might not shake the earth under your feet, Jeremy Liew, managing director at Lightspeed Venture Partners, a Menlo Park, Calif. venture capital firm, believes the increase will create a "double uplift" for online advertising. "It's time we saw that uplift take effect," he says.

That uplift comes from companies increasing their share of online advertising in 2009, although overall budgets remained low. That will change in 2010. Then in 2011 and 2012, the trend will continue with overall budgets increasing, but more of it will go to online.

Expect to see more VC dollars flow into an increased number of portfolio companies in 2010, according to the National Venture Capital Association (NVCA). The responses from more than 325 venture capitalists across the United States come from a study conducted between Nov. 30 and Dec. 8.

Sixty-three percent of respondents expect venture investment dollar levels to remain the same or increase from 2009, with 44% forecasting a level between $21 and $25 billion across the board. Half of the respondents predict that more companies will receive venture financing, while one-third believe the number of portfolio companies will remain the same.

And although the NVCA does not pinpoint online advertising-related investments, it does indicate that the VC industry will begin to see gradual increases in investment levels and exit transactions in 2010.

No mistake. Advertisers will remember 2009 as a bad time to sell ads, but a good time to buy them. But there were a few bright spots in the year for companies looking for VC money.

Video game advertising managed to take advantage of the shift from offline to online, as games began to infiltrate social networks. Expect much of the same next year too, Liew says. The games were relatively lightweight browser-based and monetized through a free-to-play model on MySpace and Facebook. The tailwind created by lower customer acquisition costs will allow these games to expand in 2010 beyond the social networks and onto the Web, he says.

The big three companies to keep an eye on in 2010 are Playfish, Playdom, and Zinga, Liew says. At between 18 and 24 months old, these companies bring in between "tens-of-millions and hundreds-of-millions in revenue," he says. "That's a pretty remarkable rate of growth."

Other categories he identified as benefiting from the tailwind are subscription, lead generation and ecommerce businesses -- companies that Liew plans to make investments in during 2010.

A few consumer product goods (CPG) companies took advantage of the down year. Pockets of brand advertisers, such as Cocoa-Cola, Unilever and Procter & Gamble (P&G), reportedly spent "much more meaningful dollars," shifting budgets from offline to online. Aside from CPG companies, automotive has become more active online, too, taking advantage of buying up premium display, online video, and rich media ads.

Some VC firms experienced tough times raising money in 2009, Liew says. People who had funds invested at a similar pace to 2008. And while there's a distinction between the availability of capital and the willingness to spend, next year, investments should look very much like they did this year, he says.