A report released by SearchIgnite yesterday concluded that U.S. paid search increased almost 27% in the third quarter of 2008 compared to the year-ago period. It looks like sellers have shifted more money into interactive advertising from traditional marketing as of late.

However, the same report stated that retail advertisers upped their search spending in the Q3 period only by 1.5%. Roger Barnette, SearchIgnite's president, stated in the report that, "Retail had issues throughout the year, but it hasn't affected all sectors." Barnette concluded by saying that travel, media and the non-mortgage area of financial services didn't dip like traditional retailers this past quarter.

Adding to a general retail pull-back dlately, the report also stated that retail sellers cut back on paid search spending by 10% in September. Whether retailers continue to curtail paid ad spending in Q4 amidst the most tumultuous market and consumer outlook in a long time remains to be seen, but market sentiment thinks it will. Overall September sales slowed down at a pace not seen in three years and October may not be any better. Less sales = less paid ad spending? Pretty likely.

Google (NASDAQ: GOOG) had a very busy 2007 -- initiatives and projects, product launches and a furious growth rate that kept analysts guessing every single quarter. With so much going on at the world's most popular internet search engine, will Google lose focus on the bread-n-butter machine of its revenue -- web searches?

If Google would pour as much focus and resources into all its products as it does the constant refinements it gives its search-related advertising, the company would have many revenue legs to stand on (most likely). However, Google has a history of launching products to see how they do before dedicating too many resources to it. After all, it took years for text advertising on Google searches to produce billions in quarterly revenue. The more products prove themselves, the more attention they get.

What other products from Google will get more and more attention in 2008? The New York Times says that Google could eventually control 80% to 90% of internet searches, up from today's sub-70% level. Can Google really attain search engine growth to attain complete and utter domination of search?

If not, where are supplemental revenues going to come from? Google is lining up products to fill this void, but it can't lose focus on its core search business, even for a nanosecond. To fuel all the growth and the massive product launches from the company, the revenue will have to be there. Right now, that's all search -- and it must continue to be Google's main focus in everything it does.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

Yahoo! Inc. (NASDAQ: YHOO) was the shining star of the internet bubble in 2000, just before the dot-com crash, and has managed to keep a huge customer base (tens of millions, if not hundreds of millions based on how you calculate it). Yahoo! customers are loyal apparently, even though Google has trounced Yahoo! in recent years in terms of search popularity and overall brand awareness. Like Google Inc. (NASDAQ: GOOG), Yahoo! was founded by Stanford grad students, Jerry Yang and David Filo, so that information on the web could be more easily found back when the web was in its infancy -- 1995.

From 1995 to 2001, Yahoo! grew at a rapid clip, and then saw a downward spiral as advertising fortunes started collapsing at the same time Google's "text ad" advertising model started growing by leaps and bounds. It's pretty obvious by now that Yahoo!'s "one ad for all" approach grew quite stale (and so did its revenues) at the same time Google's "customer relevant" and unobtrusive ad model grew an an inversely proportionate rate. Yahoo! has made great strides on the comeback trail under five-year CEO and Hollywood expert Terry Semel, who has modeled Yahoo! as a "relationship builder" to customers (and gotten them to pay for certain services).

This model is quite opposed to Google's "tool-based" customer model that can't touch Yahoo!'s model for creating and enhancing actual relationships with paying customers, beyond just providing easy internet tools for customers while keeping that "relationship" quite distant. Yahoo! shares spit almost three years ago, but have remained between $29 and $44 per share since that time. By contrast, Google's shares have skyrocketed from $85 in August 2004 to over $460 today. In terms of an investment over the past five years, it's hard to draw a conclusion since Google has been publicly traded for less than three years, while Yahoo! has been traded for quite a bit longer than that.

In the realm of business, which I like to refer to as organizational warfare, there's that constant struggle for consumer recognition and market share that makes the wheels of commerce go 'round. Bringing that eternal business struggle to a point and form that I can work with and understand, often involves the application of one simple dynamic taught to me long ago. Business, and many other aspects of life, can be more easily viewed and understood by applying the same concepts as a game of chess. I have applied that analytical template to a multitude of situations and it always seems to play out.

I'll give you just a few examples of the principles of which I write, and I'll frame them with the Yahoo / Google struggle. When you're done reading you may decide I'm a bit off center, but there are those of my readers who know exactly what I'm writing about.