July 21, 2008, 12:00 AM

Google extends its dominance in search advertising, report says

Google’s pay-per-click rates increased by an average of 13.8% in Q2 2008 compared with the prior year quarter, while prices went up 5.6% for Microsoft Live Search and declined 7.3% at Yahoo, according to search marketing firm Efficient Frontier Inc.

Google’s pay-per-click rates increased by an average of 13.8% in Q2 2008 compared with the prior year quarter, while that rate went up 5.6% for Microsoft Live Search and declined 7.3% at Yahoo, according to search marketing firm Efficient Frontier Inc.

Return on investment improved for all three search engines, with Microsoft Live Search leading the way with a 25% increase in Q2 2008 vs. Q2 2007. Yahoo Search ROI increased by 13% and Google’s was up by 3%, according to the report “U.S. Search Engine Performance Report: Q2 2008,” which was released last week by Efficient Frontier.

Retailers’ search spending was essentially flat, with a 1% increase in the quarter year-over-year, while automotive advertisers bumped search advertising spending by 24%. Financial services advertisers, reeling from the mortgage disaster, cut search engine spending by 7% in Q2 2008 and travel advertisers slashed spending by 17%, the report says.

Efficient Frontier analyzed 23 billion impressions and more than 390 million clicks to determine how shifts in the search engine marketplaces impacted overall spending and campaign effectiveness. The search engine report was based on data from a sample of the company’s U.S. clients from Q2 2007 through Q2 2008, and includes data from large search engine advertisers across multiple verticals.

Google is extending its lead in search advertising, the report says. For every new dollar spent on search advertising in the second quarter of 2008 vs. Q2 2007, Google took in $1.10, while Yahoo Inc. lost 9 cents and Microsoft Live Search lost 1 cent, Efficient Frontier says..

Google garnered 77.4% of total search engine spending in Q2 2008, an increase of 2 percentage points over the previous year. Yahoo lost nearly 2 percentage points of search engine share in the quarter, accounting for 17.8% of total spend while Microsoft Live Search remained steady at 4.8%. of search engine spending, says Efficient Frontier.

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