-By Mike Shields

The Internet analyst community is starting to see signs that online advertising will soon take a hit as a result of the ongoing economic meltdown.
 
Though the latest spending data issued by the Interactive Advertising Bureau and PricewaterhouseCoopers earlier this week indicated a solid growth rate of 15.2 percent for online advertising through the first half of 2008, some observers see signs of weakness. eMarketer analyst David Hallerman issued a report on Oct. 9 pointing out that classified ad spending was down by more than 5 percent during that period.

Classified ad slippage, “may turn out to be a canary in the coalmine, showing the first signs of dizziness in an increasingly toxic environment,” said Hallerman, who theorized that since classified ads are typically purchased in a much tighter time frame than are display ads or video, they may offer a more current snapshot of where the market is heading.

Meanwhile, UBS Investment Research Internet Analyst Benjamin Schachter also expects the current economic turmoil to stifle online ad growth over the next several quarters following what was a weak September. In a separate report issued on Oct. 9, Schachter wrote, “We are also lowering our estimates and price targets across the board to reflect a deteriorating macro-economic environment that we expect will inevitably impact the online advertising market and consumer spending.”

Schachter also predicted that spending delays and cuts will hit the majority of Web media companies, though some will be hurt more than others—and generally the Web should hold up better than traditional media. But even search juggernaught Google won’t be immune, according to his report. “We continue to believe that Google is relatively better positioned than the others,” he wrote. However, “We expect its [third quarter] results will likely be slightly below consensus expectations.”

Yahoo, according to Schachter’s report, is in a more vulnerable position due to its ongoing executional challenges as well as it’s dependence on softer categories like automotive and financial services. And despite recent public stances by both companies, Schachter still believes that Yahoo has a strong chance of being acquired by Microsoft.