• by Mark Walsh  @markfwal, November 20, 2008

Online ad spending remains virtually flat this year--with the third-quarter total of $5.9 billion only 2% ahead of each of the last two quarters, according to the latest figures from the Interactive Advertising Bureau and PricewaterhouseCoopers.

While up 11% from a year ago, ad revenue in the quarter underscored how online growth has all but stalled in 2008 in the face of deepening economic uncertainty. If current patterns continue, online advertising this year could end up growing only 10% to about $23 billion, compared to last year's 26% increase to $21.2 billion.

The results are only likely to feed speculation that 2009 could be the first flat-to-down year for online advertising since 2003. Borrell Associates caused a stir recently with its prediction that online ad spending will top out next year, with some components of interactive advertising showing little or no growth.

The worsening economy has also prompted a wave of other downward revisions in analysts' online ad forecasts for this year and 2009. Citi Internet analyst Mark Mahaney, for example, last week reduced his 2008 projection from 16.1% to 11.4% growth--and 2009, from 14.1% to 5.8%.

Meanwhile, a fresh batch of grim economic news this week, including the highest number of jobless claims in 16 years, suggests that a full-blown recession is inevitable, if not already begun.

While acknowledging the worsening outlook, media buyers continue to emphasize that the shift of ad dollars from traditional media to digital will help to insulate online spending from the downturn.