Last week, I did a blog entry asking whether the Internet was shattering the advertising industry

Well, if it's not the Internet, it's certainly the recession. The Wall Street Journal reports that spending on online advertising is starting to cool down. While online-ad revenue surged 26% the year before, growth has now slumped to 10.6% and in the fourth quarter, when the economy has turned ugly, unemployment is soaring, more businesses are going belly-up and marketing budgets cut back, it slowed to a trickle at 2.6%.

Now Group M which is part of the world's biggest advertising agency WPP has put out a statement warning that global advertising is going to drop 4.4% to $425 billion in 2009. When you take into account, it actually boils down to &% fall in advertising.

Group M director Adam Smith is not pulling any punches and he leaves us in no doubt that the industry is in serious trouble. "The 2008/2009 period is now a more serious advertising recession in scale, duration, and relative to the global economy, than the extraordinary 5.1% real-terms post-dotcom global advertising correction of 2001," Smith said.

Don't expect the US stimulus package to help either. It won't result in increased consumer spending at a time when unemployment is climbing and the housing sector is in strife.

Why is this important? Because advertising is a lead indicator of economic trends and the data suggests there will be no recovery for some time.