Bing-Yahoo May Challenge Google. Just Not Yet.

Two days ahead of reporting its third-quarter earnings, Google continues to gain on the combined search engines of Yahoo and Microsoft’s Bing–at least in the amount advertisers are spending on search ads. That’s the conclusion of the latest surveys from two search marketing companies, Efficient Frontier and SearchIgnite.

According to Efficient Frontier, Google’s share of paid search spending rose to 77.9% in the third quarter, up from 75.8% in the second quarter. The reason, according to the company: Even though Bing has consistently provided a better return on spending than Google, the addition of Yahoo’s less effective search ads dragged the combined entity down.

Likewise, SearchIgnite said Google’s share of search spend rose to 80.2%, the highest since first-quarter 2009 and the highest since SearchIgnite began tracking spending in 2007. Even though Bing led the growth in spending among the major search engines, up 21% from a year ago, Yahoo fell 10%.

And things aren’t likely to change anytime soon, adds Efficient Frontier:

Google will likely see relatively significant gains in the fourth quarter as both seasonality and the Bing- Yahoo! integration skew spend in their favor.   The seasonal retail focus of Q4 typically favors Google in spend as they over-index in retail at over 80% share.  The changing efficiency of the Bing-Yahoo! integration will likely see some additional, although likely temporary, spend shift in Google’s favor.

Still, it’s hardly game over for Binghoo. SearchIgnite says click-throughs on the combined service have risen because Bing’s ad-serving formula is delivering better results, so advertisers are ready to spend relatively more–especially since they really want an alternative to challenge Google’s dominance.

What’s more, search advertising looks to be continuing its rebound (as does overall online advertising), the company says:

Paid search spend in Q3 increased 5.8% year-over-year compared with flat growth a year ago and exhibited positive momentum month-over-month, with July growing 4.9%, August 5.8% and September 6.7%. The growth throughout the quarter bodes well for a strong Q4.

Efficient Frontier saw a similar trend and also anticipates a strong fourth quarter:

In Q3 2010, the SEM sector extended its 2010 growth streak. Year on Year (YoY) spend was up 19% with a solid 6% sequential Quarter on Quarter (QoQ) growth. The important metrics of CPC, clicks, and impressions all rose indicating both strong advertiser and consumer demand. Overall return on investment (ROI) in search is up 8% YoY, a critical factor driving the rising CPCs and overall advertiser demand.

Efficient Frontier believes search will grow in the range of 15-20% in Q4. Efficient Frontier’s reason for Q4 search optimism is built on the following three reasons. First, retail has led the way for search in 2010 with consistent growth. Next, Q3’s 19% YoY growth in spend on more difficult comps and slight sequential rise is a positive signal. Finally, strengthening ROI numbers with increasing CPCs bode well for overall advertiser demand.

There’s one wild card this holiday season in online advertising: Facebook. Efficient Frontier anticipates that a lot of advertisers will up their test budgets for ads on Facebook.

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Live at Logitech’s Google TV Launch: Revue Looks Good. But $300? Could Be a Tough Sell

Logitech is about to debut its long-awaited Google TV box at a San Francisco press event. It’s the first device to come out publicly since the search giant announced its Web-TV plans back in May. Those who pay close attention to Google TV already have seen basically what it looks like, so now the key questions will be:

* How much? Rumors peg the Logitech device, called Revue, at about $300. That’s too high for an impulse purchase, and while it’s considerably different from Apple’s new Apple TV, the latter’s new $99 price has to be more attractive, at least to Mac and iPhone partisans.

* What else? Rumor also has it that Logitech will offer a camera for videoconferencing.

* When? Word is that it will be in Best Buy stores Oct. 17.

OK, so we’re underway. Here’s the launch site and here’s the blog post. Logitech pleads to turn off any unnecessary wireless devices. Uh-oh, demo hell coming?

UPDATE: I wrote a somewhat more coherent post for Technology Review. The upshot: Logitech’s Revue ably illustrates Google TV’s potential for igniting a revolution in the nature of television, but the high price means that revolution won’t be televised for a little while.

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