If the economic news is generally bad, one bright spot is the state of online advertising. While the rate of growth of online ads is slowing, the sector is still expected to increase revenue by double digits in the coming year, according to the experts. 

The larger problem is that, despite all the hype, Internet ads are still barely 5 percent of all ad spending and this has huge consequences for popular Internet services like video and social networking.

The crowds were large and enthusiastic this week at ad:tech New York, a digital marketing conference. One measure of the optimism at a tech industry event is the amount of tchotckes being handed out; at ad:tech, the freebees were plentiful, if cheap.

Evan Neufeld, a vice president at comScore Brand Metrix, said that “media spending is going down,” but his research firm still estimates that online ads will grow 14.5 percent in 2009. That should be good news for a lot of companies that have invested in selling ads or providing ad networks on the Web.

The problem is that the total spending on the Web is still tiny. Morgan Stanley’s Mary Meeker slapped the audience with some harsh reality at San Francisco’s Web 2.0 Summit. Ms. Meeker, whose presentations are always full of hard facts and numbers, reviewed the sharp decline in market caps of the major industry sectors and predicted that technology spending and ad spending would also fall. But she noted that online advertising was the only ad sector whose growth is expected to remain positive for the rest of this year and into 2009.

When it comes to spending money to sell stuff, big advertisers still place most of their bets on television and magazines. Yes, certain parts of print still get a huge share of ad dollars despite the repeated obituaries. Online ads drew $21.6 billion in 2007 out of the total U.S. spending on advertising of $469 billion. Newspapers won $46 billion and broadcast TV $44 billion. Ms. Meeker pointed out that advertisers are spending $818 dollars per household in newspapers vs. $288 on the Web, a disparity that leaves a lot of room for growth.

Ms. Meeker noted that online social and search sites are, in her words, under-monetized, despite their explosive growth. YouTube, with 329 million users, has been growing its audience at a 52 percent annual rate. Facebook, with 161 million users, has more than doubled its audience in the last year.

With the global economy in recession, the next couple of years promise to be difficult for startups and even the well-established tech companies like Google. Many of the biggest names are “under-monetized”, not making anywhere near the revenue they should expect for the number of eyeballs they provide.

But as Ms. Meeker points out, CPM, the cost per thousand of viewers, is declining even as the number of viewers goes up. Ms. Meeker suggests that Skype, the Internet phone service provider owned by eBay, could be considered the world’s second biggest “carrier” after China Mobile. But Skype only collects $1.55 per registered user annually.

Ms. Meeker is optimistic here too. She says that historically, “eyes follow eyeballs, it just takes time.” Many companies will have to walk a fine line in the next year or two–and hope she is right.