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Online Advertising Grinds To A Halt

Only a few months ago, it would have been madness to suggest that online advertising would decline in 2009. But now, according to the most recent estimates from IDC, online spending in the first and second quarters is expected to be so weak, that negative growth for the year is looking increasingly likely. On Wednesday, the researcher completely slashed its growth estimate of 10% for 2009, replacing it with an estimated 5% drop in online ad revenues for the first quarter, which could get worse in the second.

What a turnaround. Last year, the market grew a robust 18%, despite 0.4% growth in the fourth quarter. As Tech Crunch contributor Sarah Lacy says, "Suddenly everyone's bull scenario isn't double-digit growth; it's a year that doesn't tip negative."

As Lacy notes, just about everyone (minus Gawker Media's Nick Denton and Silicon Alley Insider's Henry Blodget, perhaps) got this story wrong, assuming that online advertising would ride out the recession because it's a more measurable medium than other forms of advertising. The other big assumption, she says, was that the huge discrepancy between time spent online and ad dollars spent online would have to even out at some point. "There's enough truth in these assumptions to ensure that online advertising won't have nearly as bad of a year as offline advertising," Lacy says, "But in this market, that's like saying a broken leg is better than an amputated one."

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