• by Laurie Sullivan , Staff Writer @lauriesullivan, October 12, 2010

What if advertisers had no choice when it came to bidding on paid search ads because Google became the only search engine to place media buys? In fact, what if consumers didn't have a choice either, searching online for content meant continually seeing the same query results matched to specific ads on Google; and when it came to natural search listings, all choices relied on PageRank and algorithms designed by engineers at one company, Google? What are the implications if advertisers and consumers had no choice?

Looking at some of the paid search reports surfacing this week it may seem as if advertisers don't have a choice. One suggests Google now owns more than 80% of the paid search market share.

It doesn't take a genius to realize at least in the short term Bing and Yahoo could lose paid search market share as the companies work to combine ad serving on Microsoft adCenter. Hard as they try to educate advertisers, some will take a wait-and-see approach until the two companies deem the integration complete and fully functional.

As Google's market share rises, analysts see numbers falling more in line with Wall Street expectations. Google reports earnings Thursday. Mark Mahaney, managing director for Internet research at Citi Investment Research, expects to see $5.2 billion in net revenue (and $6.50 in non-GAAP earnings per share), up 18% compared with the year-ago quarter and 2% sequentially. Street consensus puts expectation at 5.25 billion and $6.67, respectively.

Year-to-date Internet advertising revenue through June 2010 totaled $12.1 billion, up 11.3% from the $10.9 billion reported for the same six-months in 2009, according to the Interactive Advertising Bureau. The IAB, which released numbers Tuesday, called search the "lead" engine in online advertising, followed by display banners and classifieds. Search revenue accounted for 47% of year-to-date revenue, flat over the 47% reported in the first half of 2009.

Companies providing paid search support also began pushing out reports this week. Paid search ads increased 5.8% in Q3 2010, compared with year-ago quarter, according to SearchIgnite, which manages about $600 million in advertising. Company analysts estimate Google took 80.2% of the U.S. paid search ad spend brands shelled out, the largest market share the paid search company has tracked since it began monitoring search engine market share data in Q1 2007. The uptick means 2 percentage points sequentially and 7.9% year-on-year growth.

SearchIgnite points to the benefits from early results of the Bing-Yahoo data. It appears the alliance will make search performance stronger on Bing/Yahoo inventory and won't cause a dramatic rise in CPCs. Microsoft's Bing had the most pronounced spend growth among the engines, up 21% compared with the year-ago quarter, though market share gains showed just modest improvement at 6.4% in Q310, up 6.2% sequentially.

Yahoo's search share dropped to 13.4% from 15.4% sequentially. This drop, along with the gain in Bing, is partially due to testing occurring on the combined Yahoo/Bing Search Alliance.

Click-through rates, however, increased for ads served on the combined Bing-Yahoo network, which could suggest adCenter matches more relevant ads compared with Yahoo's ad serving platform. Unlike reports from GroupM that forecast CPC inflation, analysis from SearchIgnite identifies little uptick.

Average cost per click will increase, but only slightly. Click through rates will increase on the combined platform, according to the paid search firm. The company tracked 55 billion ad impressions and more than 1 billion clicks on Google, Bing and Yahoo from Jan. 1 through September.