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Search advertisers spent 29% more on search engine advertising in the fourth quarter of 2007 compared with the year-earlier period, and they improved their return on investment (ROI) 13.1% in the same period, according to Efficient Frontier‘s “Search Engine Performance Report: Q4 2007.”

The factors considered by EF were search engine spend, click through rates (CTRs), cost per click (CPC), and return on investment (ROI).

Among the findings of the report:

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  • Of the top three search engines, Google made the most gains, increasing its share of total market spend by 8.6% to reach 76.6%, improving ROI 7.5% and capturing 97% of the total increase in search spending from 4Q06 to 4Q07.

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  • ROI on Yahoo improved 39.4% since the launch of Yahoo’s Panama platform (4Q07 versus 4Q06); however, overall spend on Yahoo declined 3.8% during this period, leaving it with 17.9% of search engine spend in 4Q07.

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  • Yahoo Search Assist launched in October 2007, and the resulting impression increase may have contributed to a 34% drop in CTR on Yahoo search from Q3 to 4Q07.
  • MSN maintained its lead in driving the highest ROI for advertisers; its ROI was 27% greater than the average return across all engines in 4Q07.
  • MSN also leads the major search engines in average click-through rate (CTR). It maintained its 5% share of search engine spending in 2007.

Regarding paid search market share outside the US, see “Global SEM Breakdown: Mostly Google,” from the Efficient Frontier blog.

About the study: Efficient Frontier analyzed nearly 17 billion impressions and more than 270 million clicks to determine how shifts in the search marketplaces in 2007 affected overall spending and campaign effectiveness. The Search Engine Performance Report: Q4 2007 was completed based on data from a fixed sample of Efficient Frontier’s US clients from 4Q06 through 4Q07 and includes data from large search engine advertisers across multiple verticals.

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