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Online Speding Increases, Growth Down

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While online spending is up, its traffic growth is down - a result of the faltering economy and the leveling off of the Internet population, according to a new report.

Findings from Nielsen/NetRatings and Harris Interactive, indicate that online spending rose in Q3 to $16.3 billion, a 60 percent jump from the same period a year ago. The increase, while respectable, is down from the 80 to 100 percent growth in online spending that e-tailers saw in years past. "That's about the slowest growth we've seen since we started this survey," said Sean Kaldor, vp of analytical services, NetRatings. "The economy is bad, which has impacted online spending to the same degree as offline." Meanwhile, Internet spending in Q3 increased seven percent over Q2's $15.2 billion.

The stabilizing of the Internet population has also led to less remarkable growth in online penetration. "The days of hyper growth are behind us forever," said Kaldor, adding that the Internet population used to experience increases of 50 percent year-over-year. According to Nielsen, 176.5 million people have access to the Internet this October, a 13 percent improvement over last October.

Travel led the e-commece categories in Q3 with nearly $4.3 billion in online spending, an increase of 53 percent compared to third quarter 2000. Online travel players took a hit post 9/11, however; spending in the category fell more than 20 percent to $1.1 billion in September versus $1.5 billion in August. The clothing and apparel category brought in $1.5 billion during the third quarter, while auctions rounded out the top three categories taking in more than $1.2 billion.

With the holiday season in full swing, Nielsen predicts $9.9 billion in online spending in November and December (an estimate that does not include travel). In October, spending online reached $4.6 billion.