Mike Shields wrote an interesting article last week at MediaWeek, about the recent improvement in retail advertisers’ performance. Shields cites search management firm Performics, which recently reported retail spending among its clients increased by 14% during July – marking the first increase in search advertising this year.

Shields goes on to note that, even with the online advertising industry reeling from the recession, this marked improvement will likley lead to further increases in the coming months. In Performics’ recent study, one standout during the recent spending surge were retailers advertising offers related to the US government’s Cash For Clunkers program. And, a noted beneficiary of the surge was Bing, Microsoft’s revamped search platform. Performics’ clients spent 40 more with Bing, than with MSN.com a month earlier. Consequently, Shields has noted this has resulted in a marketed increase in the average CPC on Bing ( about 20%).

While good for search advertising, the recent improvements in ad spending and competition for prime keywords are likely to systematically drive search advertising prices up. As the economic dust settles, one can expect ad budgets to slowly grow as advertisers continue to spend more money on the most effective channels of advertising.

Moving forward, the real challenge for advertisers will be to find truly cost-efficient advertising solutions through means outside of just search engine marketing. This is where an effective display advertising solution has an opportunity if it is able to match or surpass the efficiency of search, in terms of both economics and relevance.

via Mike Shields @ Media Week