So now that we are two months into the Bing launch, where has the $100 million ad budget and loads of PR coverage gotten Microsoft? Well on many fronts Bing seems to winning a few hearts and minds but regarding the bottomline connections it’s a little less straight forward. Bing continued to build Microsoft’s search share, but paid search clicks didn’t grow at the same rate.

Last month we told you that this .3ppt increase was impressive because the Search industry as a whole struggled. This month we unfortunately can’t make the same claim; in a month where the industry grew query volume as a whole, we would have expected Bing to have more than just a flat growth rate. Still growth in any form is a good thing compared to the trends we were looking at for Live Search a few months ago.

Google’s market share grew a solid 12.8% from this time last year, remaining at roughly 74%. Yahoo! was the biggest loser this month in terms of search share, declining 1% since June.

Ask led the field with 48% month-over-month growth in volume, but this growth was needed simply to make up for the previous two months of losses. Additionally, it is important to keep in mind that as impressive as 48% M-O-M growth sounds, that only accounts for a little over 100 million queries; hardly a drop in the total queries bucket that saw over 12.5 billion queries served up in July.

Google had a slight gain in sponsored click rate with a .13 ppt increase. While this might not sound like much, Google generates over 6 billion referrals each month, so that increase accounts for millions of additional paid clicks, which is nothing to scoff at.

We did not see the same uptick for Bing, which despite increased search share saw a slight decline in paid clicks. After strong growth in the sponsored referral rate in June, Bing lost .1 ppt in July. We saw a surprising jump in Ask’s paid clicks last month as well, but unfortunately like Bing, Ask was unable to convert its query share gain into growth in paid clicks and this month slipped back to 2008 levels. It is important to note that paid click performance is effected by a number of other factors out of Bing’s and Ask’s control. Bad advertising is still bad advertising even if you slap it on a Ferrari.

It will be interesting to see how the announced Yahoo! search and Bing partnership will pan out. Success will depend on Bing’s ability to keep increasing its search share, while Yahoo! will need to bring high quality advertisers whose sponsored search results generate more paid clicks.

Although Dr. Bernanke is confident that the U.S. economy is on the road to recovery, we expect online advertisers to continue keeping a close eye on their minimized budgets until there are promising signs of increased consumer spending. Will the engines use this opportunity to do more with less and increase the effectiveness of their paid clicks? You know we’ll be watching and reporting!

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