Aug. 12 (Bloomberg) -- Internet advertising spending in the U.S. will be lower than expected this year and next, putting pressure on Google Inc., Yahoo! Inc. and Microsoft Corp., according to EMarketer Inc.

EMarketer plans to cut its forecast for 23 percent growth in 2008 by ``a few percentage points,'' said analyst David Hallerman. The New York-based research firm had predicted almost $26 billion in ad sales this year. Hallerman said his estimate for 16 percent growth in 2009 is ``also probably too high.''

Google Chief Executive Officer Eric Schmidt said for the first time last month that the company, the biggest seller of online ads, faces a more challenging economic environment. Google's ads tied to Internet search results are still faring better than much of the graphical banner ads sold by companies such as Yahoo and Microsoft, Hallerman said.

``Advertising is the canary in the coal mine in a weaker economy,'' Hallerman said. ``All the bears aren't out of the woods yet when it comes to the economy.''

In March, Hallerman cut his forecast to $25.9 billion from $27.5 billion, citing a foundering economy. Still, in the title of the report, he said ad spending would be resilient as advertisers continue to shift budgets to the Internet from print and television.

Since then, the picture has deteriorated as advertisers accept that ``the economy won't be turning around on a dime,'' he said. EMarketer hasn't released its updated forecast yet.

Economy Splutters

Google's second-quarter earnings missed analysts' estimates, while Yahoo posted an 18 percent drop in profit amid increased spending on new projects. LookSmart Ltd., which sells ads on sites such as Ask.com, said last month that some marketers are cutting back on spending. Microsoft's Internet ad revenue in the latest quarter missed the company's forecasts.

Google, based in Mountain View, California, rose $1.77 to $502.61 in Nasdaq Stock Market trading today. Redmond, Washington-based Microsoft added 22 cents to $28.12. Yahoo, in Sunnyvale, California, gained 17 cents to $20.43.

The U.S. economy expanded 1.9 percent in the second quarter, down from 4.8 percent a year earlier. Growth was less than forecast as a housing slump and rising unemployment worked against federal tax rebates.

Marketing Cuts

Spending on Internet ads grew 18.9 percent in the second quarter, according to a preliminary estimate from Karsten Weide, an analyst at market researcher IDC in Framingham, Massachusetts. That growth would be 7 percentage points lower than the rate in the year-earlier quarter, he said.

Without the slowing economy, sales would have increased more than 20 percent, Weide said. Chief Financial Officers typically cut ad budgets first during a slump.

``The first call the CFO makes is to the marketing department,'' he said.

Many advertisers only realized the economy was getting worse after they had already committed to buying spots for TV shows that start in September, said Steve Kerho, a vice president at San Francisco-based ad agency Organic Inc. Those ads are typically bought in May and June in negotiations called the upfronts.

Because they can't get out of those deals without losing money, many advertisers are cutting online spending instead, Kerho said.

Rob Norman, CEO of New York-based GroupM Interaction, which buys online ads for companies such as AT&T Inc. and Dell Inc., said clients are sticking with ads that are closely linked to customer purchases. That benefits Google's business of selling ads next to Web search results, he said.

Still, that means Google may not be able to attract as many advertisers as it would like to the YouTube video-sharing site because clients find it hard to target specific users on YouTube, Norman said.

``It's not going to be the easiest year,'' he said. ``The queen would call it an annus horribilis.''

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net

Last Updated: August 12, 2008 18:40 EDT