Marketers are on the cusp of integrating their search marketing with online branding, reported Merrill Lynch Monday in the debut edition of a biweekly report on Internet advertising. Report author Lauren Rich Fine, first vice president at Merrill Lynch, wrote that the company was hearing anecdotally that more and more marketers were integrating search into their marketing strategy. "While search, to date, has typically emanated from departments outside of the marketing department, given its increasing importance, we would expect it to be incoporated into the overall marketing plan," Fine wrote.

Merrill Lynch also remained bullish on Yahoo!, notwithstanding a recent price drop in sponsored listings. Fine called purchasing Yahoo! stock "the most attractive way to play the increasing emphasis on online branding and search as part of overall marketing plans."

The report noted that risks for Yahoo! include "intensifying competition, changes in sentiment for the Internet sector, changes in outlook for the online advertising industry and lower than expected margins."