• by Laurie Sullivan  @lauriesullivan, April 15, 2009

Gloomy declines in January and February made way for brighter days in March. Paid search marketing budgets rose 11% in the third month of the first quarter, compared with the prior year, according to the SearchIgnite report released Tuesday.

The "Q1 2009 U.S. Paid Search Market Report" suggests marketers continue to change budgets, weekly, making it difficult to predict future investments. Roger Barnette, president of SearchIgnite, expects to see continued hesitation in spending until the economy improves.

Search marketing has become the bellwether that maps economic trends. Marketers can launch a paid search campaign and nearly immediately see positive or negative results. While the uptick in March indicates marketers feel a relieved, Barnette wants to see a solid second quarter before feeling more comfortable that the industry has begun an upswing.

Google continues to dominate paid search campaigns. The Mountain View, Calif., search engine garnered 74% of search spend between January and March 2009, compared with other major engines. If the search and advertising deal between Microsoft and Yahoo happens, it could alter the landscape. "There are many marketers that manage complex campaigns on Google and have their brand terms on Yahoo and MSN, though not typically SearchIgnite clients," Barnette said. "If there's a larger second players that has good performance and inventory, marketers would pay more attention and invest the dollars."

Yahoo gets dramatically less revenue per search engine results page than Google. MSN has always performed well for marketers, they just have inventory issues, Barnette said. Combining Yahoo's inventory with Microsoft's quality traffic would turn combined efforts into a real competitor, he said.

Consumers remain cautious when making purchases, however. They continue to buy, though they take longer to make purchase decisions. The time between a customer click and purchase has increased 32.4%, compared with same quarter in the prior year.

Declining return on investments (ROIs) has resulted from users clicking more times on the same marketer's ad. It implies customers will make the purchase but it's just taking longer. On the other hand, customers are clicking more times on ads. While conversion rates are lower, the data indicates similar number of unique customers could make purchases, which reflects positive on results.

Marketers would prefer customers to make the purchase as quickly and often as possible. Any behavior that would extend the time for customers to consider making a purchase isn't good news, but not necessarily bad either, Barnette said.

The report is the latest in a series of quarterly reports from SearchIgnite that has tracked more than 37 billion impressions and 700 million clicks on Google, Yahoo and MSN from Jan. 1, 2006 through March 31, 2009 across more than 500 marketers, all SearchIgnite or 360i clients.