• by Wendy Davis  @wendyndavis, February 1, 2006

Marketers believe that search ads on Google will yield better results than search ads on Yahoo, MSN, or other engines, according to a new study released Tuesday by research company Outsell.

"Yahoo and MSN face extended minority status in the ratings of advertisers if they don't change the perception that ads on Google are more effective," stated the report, which Outsell distributed in New York on Tuesday, at the annual meeting of the Software & Information Industry Association.

For the study, Outsell fielded a survey to 1,200 advertisers in November. About 71 percent of respondents said that search ads on Google were effective, compared to 62 percent who considered search ads on Yahoo effective and 49 percent who thought MSN search ads were effective.

But when Outsell looked more closely at the results, it found that the most enthusiastic Google fans also had the smallest marketing budgets. The average marketing budget of respondents who rated Google "extremely" effective totaled $3.7 million. But average budgets for those who considered Yahoo and MSN extremely effective came to $4.6 million.

The study also forecast that marketing budgets would continue to shift online this year. Overall, the company predicted that online marketing spending would grow by 19 percent, with search marketing increasing by 26 percent. Print spending, by contrast, will increase by an estimated 3.3 percent, while TV and radio will grow by an anemic 2.4 percent.

Outsell also reported Tuesday that overall information industry revenues rose 7.7 percent to an estimated $285 billion, with Google and Yahoo combined accounting for about 5 percent of the total. "Google and Yahoo are the primary drivers of information industry growth and are taking market share, dramatically changing the information industry landscape and disrupting market share leadership of established publishers and information providers along the way," stated the report.

Based on revenue, Google become the fifth-largest information industry company last year--up from number 18 in 2004, but still trailing behind industry leaders Reed Elsevier, Thomson Corporation, Time Warner, and Gannett. Yahoo climbed to the eighth spot, from number 18 the year before.