• GigaOm, Thursday, September 13, 2007 10:30 AM

For the online ad industry, the "good news" from yesterday's TNS report, which showed that advertising had declined for the second straight quarter, is that Web spending rose 17.7 percent, as marketers took money from their TV and print budgets and poured it into online endeavors. But GigaOm's Om Malik says to take the "good news" with a pinch of salt.

For one thing, the effects of the housing bust and the tightening credit squeeze haven't really been felt yet. In its report, TNS says as much: "Given the uncertainties about near-term economic growth and consumer spending, we expect core ad spending will continue to face challenges during the second half of the year," the measurement firm's President and CEO Steve Fredericks said.

While the effects will continue to be felt more severely in print and TV, major Web publishers will also take their hits, says Malik. Two of the slumping sectors, financial services and autos, happen to be some of the Web's biggest spenders. Malik says these advertisers will have to slash their ad budgets to get in sync with market demand, which inevitably means fewer display and search dollars for agencies, and especially, major online publishers. Why--because the rise of social networks, smaller publishers and the ad networks that distribute advertising to them means "too many destinations for too few ad dollars" in the immediate future.

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