Frustrated by the soaring price of Internet-search advertising and diminishing returns from the ads they buy, mid-sized advertisers say they plan to reduce how much business they do with Google this year - in some cases, significantly.

Last year, for example, eBags.com co-founder Peter Cobb spent between $5 million and $8 million to peddle suitcases, handbags and other carrying cases online. Google got 75% of that amount. But this year it will get "significantly less," Cobb said. "The Google percentage has got to go down," he said.

In many cases, the cost of an eBags.com ad placed on either Google's own Web site or one of its affiliates now equals 45% of the price of the product it promotes. That's crimping the company's own profit margins and forcing it to look elsewhere to market its bags.

Cobb was among a half-dozen Google customers - all of whom spent between $4 million and $10 million on search ads in 2006 -- who told MarketWatch they plan to spend less this year to have their ads placed alongside Google's search results.

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