US media analyst Screen Digest predicts a 5% decrease in online advertising this year, based on the IAB's recent year-end report for 2008, before stabilising with a 0.4% increase in 2010.
Screen Digest found that while internet advertising grew 10% in 2008, the fourth quarter was almost flat with 2.6% growth.
Display advertising was particularly hard hit in 2008, growing by 8% on the year, much lower than its previous growth of 26% in 2006 and 31% in 2007. The 8% figure was weighed down by a 4% loss in Q4, after recording more than 25% growth at the start of the year.
Screen Digest predicts this trend will continue, with display advertising bottoming out in Q1 2009 at a loss of 10%, before stablising somewhat at a 5% loss in Q4.
The company said that the search advertising market remained considerably more dynamic than display last year, and up to Q3 appeared to be "recession proof".
However, following the acceleration of economic recession in the fourth quarter, search growth rates halved. Display meanwhile has experienced negative year-on-year quarterly growth for the first time since the dotcom crash of 2001-2002.
Online display, search and classifieds are also suffering from the particularly bad state of three critical client sectors: automotive, real estate and finance.
Screen Digest said the sudden slowdown of search reported by the IAB US is consistent with the plateauing of US quarterly revenues reported by Google throughout 2008. Year-on-year quarterly growth went down from 31% to only 13% in the fourth quarter.
Screen Digest predicts all categories and sub-categories -- except video -- will decline further in 2009.
Banner advertising, which is expected to drop by 8.8%, will not be fully compensated by the double digit growth of online video, meaning that overall, display advertising will see a fall of 3.6%
Vincent Letang, senior analyst at Screen Digest, said: "Display and search, being huge and mature media, cannot be immune from the ongoing ad slump even though they will continue to outperform most other media during the period.
"We indeed anticipate the total US ad market to go down two digits in 2009 while some media (press, local TV) could be down by up to 20 per cent."