Google revs its search engine

May 29, 2008: 9:07 AM ET

By Scott Moritz

After an alarming first quarter U.S. search advertising slowdown, Google (GOOG) managed to reignite growth in the all-important paid click category according to April data from comScore.

Last month, Google's paid clicks grew 19.6% over year-ago levels, improving on an much-watched trend of slowing paid click numbers in the first quarter of this year, thanks to a strong rebound in U.S. growth. The nearly 20% year-over-year increase compares with a less than 1% decline in January and about 3% growth in February and March, according to comScore.

The results weren't so good for rival Yahoo (YHOO), which saw paid clicks fall 4.4% in April. And Microsoft's (MSFT) MSN numbers were even worse showing a 9% decline from last year, says comScore. The weak numbers underscore the logic behind a proposed merger between the No.2 and No.3 players in online search. For Yahoo, the trend is particularly dour.

"In January, Yahoo's paid clicks accelerated 15% year-over-year, 5.3% year-over-year in February, but then fell 3.1% in March, and fell 4.4% Y/Y in April," Lehman Brothers analyst Doug Anmuth wrote in a research note based on comScore's data. "Prior to March's decline in paid clicks, we note that Yahoo! had consistently seen growth in comScore's paid clicks," Anmuth notes.

Good news also came from Time Warner's (TWX) AOL unit where paid clicks reversed the decline in April by surging 28.3% over year-ago levels, according to comScore. Time Warner has been shifting its AOL strategy from the declining subscription business to more of an advertising model. The company, which also owns Fortune and CNNMoney, has been exploring deals that would pair AOL with partners like Yahoo.

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