The market for paid and natural search received a boost this week when it was revealed that nearly two-thirds of firms are set to increase their budgets in these areas this year.

The UK Search Engine Marketing Report 2008, from e-commerce consultancy E-consultancy and search agency Neutralize, found that 63 per cent of companies are planning to increase their budget for paid search in the next 12 months, while 61 per cent will be investing more in search engine optimisation (SEO) over the same period.

Google once again came out as the dominant force in the paid search sphere, with 86 per cent of search advertisers using the internet giant's platform. Eighty nine per cent of respondents said they rated Google as the best for return on investment and for quality of traffic.

“As separate entities, Yahoo and Microsoft are struggling to make significant inroads into Google’s seemingly impregnable position," said E-consultancy's head of research, Linus Gregoriadis. "It will be fascinating to see what happens if and when Microsoft and Yahoo merge."