Most interesting for Google's future, it's now apparent that advertisers are viewing search - and Google - in a new light. Up to this point, search ads have been almost solely considered a direct-response medium, where advertisers can measure how many people they reached by tracking the number of clicks and subsequent purchases or other activity.

Now, many advertisers are starting to use search ads for branding, like more traditional ads. That means companies will place ads through Google to send a message or promote a product generally, and not necessarily to get customers to take an immediate action, such as going to the Web site or purchasing an item online. "Our advertisers are now placing more brand advertising," Sergey Brin, Google co-founder and president of technology, said in the analyst call. And it appears to be working, says John Aiken, managing director at Majestic Research. "They're benefiting from people searching online and purchasing offline," he says.

The trend among brick-and-mortar retailers and even consumer-packaged-goods giants to use Google search ads for branding has made search ads more expensive for small advertisers. But it's a boon for Google. And ad agencies confirm that it's starting to take off. "Search can be a very good branding tool," says Jason Shulman, chief revenue officer for X+1, which helps companies refine their online marketing efforts.

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