• by Wendy Davis , Staff Writer @wendyndavis, April 4, 2005

The first quarter ended last week with mixed messages for online advertising. The good news is that many market indications were up from last year. Yahoo! shares were up 8 percent relative to Standard & Poor's and Google shares were up 2 percent for the last two weeks of March, according to a report issued Friday by Merrill Lynch analysts Lauren Rich Fine and Justin Post.

But the bad news is that share prices are still down from three months ago -- Yahoo! by 10 percent and Google by 6.4 percent. Additionally, Friday's initial public offering on the Nasdaq of FastClick didn't go as well as it could have. Though FastClick is profitable, shares closed at just $12 -- the same price they opened at.

More positive news came from data about search and e-commerce. Merrill Lynch, still bullish on the Internet, reported, based on data from comScore, that search traffic was up 35 percent year-over-year in February, with Google, Yahoo!, and MSN all showing gains (41 percent, 39 percent, and 39 percent, respectively).

Non-travel e-commerce also increased in February by 28 percent to $6.7 billion, according to comScore -- surpassing Merrill Lynch's expected first quarter estimate of a 22 percent increase.

Research and consulting company Borrell Associates, likewise optimistic about online advertising, recently released a report predicting continued growth. Borrell forecasts that spending in local online advertising alone will reach $3.9 billion this year, up from $2.7 billion in 2004.