The search giant didn't snag all available advertisers, however, as the report found that the 10% of marketers not using Google remained exclusive to either Yahoo or MSN. Analysts attributed this slice of market share to affiliate marketers and other companies whose business policies run afoul of Google's standards. According to the research, 30% of all search marketers run campaigns on Yahoo, while only 10% use MSN--with about half of each of their advertisers using Google as well.

The study was conducted between February and July of this year--and the number of search advertisers grew by 15-20% just in those five months, with Blair analysts noting that this points to a competitive, healthy search market overall with a long tail that continues to lengthen.

The success of Yahoo and MSN's paid search offerings hinges on both companies' abilities to snag these new advertisers with better algorithms, more streamlined interfaces and a more solid ROI--as illustrated by Microsoft's recent adCenter revamp and Yahoo's major Panama upgrade.

In March, Yahoo did see an increase in advertisers from the Panama rollout, but the numbers have since slipped steadily. The report notes that the decline had been expected, since Panama's algorithmic upgrades focused on increasing relevancy and improving the quality of the Yahoo search marketplace--which likely eliminated a number of low-quality ads and advertisers.

Yahoo's paid search improvements are promising, but the report still pegs Google as a better stock option than Yahoo: "While Yahoo is showing progress, this research is somewhat discouraging, as it illustrates the amount of work still required for Yahoo to close the gap with Google."

All three of the analyzed search engines were affected by seasonality, with 3-9% spikes in the number of advertisers during March and July, and a 1-7% dip in June. According to the report, these expected trends marked increased advertiser spending for spring and summer apparel, travel, Mother's Day (with the lone rogue factor being an uptick in real estate advertisers) and a decrease in advertisers during the industry-wide summer slowdown. "The return to growth in July was likely just a reflection of ongoing industry strength and a lengthening of the long tail," Blair analysts added.

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