Paid search is still going strong. Yahoo! (NASDAQ:YHOO) saw its March quarter earnings double to $0.14 a share on a 55% spike in gross revenue to hit $1.2 billion.

That is good news for Yahoo!, and it's even better news for Google (NASDAQ:GOOG), a company that relies even more on the Holy Grail of paid search to bring home the bacon. Google reports its earnings on Thursday.

Serving up relevant text ads on search engine result pages -- as well as a growing collection of proprietary and third-party content sites -- paid search has helped monetize the Web in recent years. So if you've seen fewer pop-up ads or graphical interstitials, you can thank paid search.

The strength in paid search is what led InterActiveCorp (NASDAQ:IACI) to announce that it would be acquiringAskJeeves (NASDAQ:ASKJ) last month, and it's why a small company like GuruNet (AMEX:GRU) has been one of the hottest stocks so far in 2005.

Yahoo! is also waxing optimistic about its future. It is expecting to produce roughly $1.1 billion in operating income for the entire year.

Other worthy nuggets in the company's first-quarter report include a 61% spurt in free cash flow to $318 million and a booming international business that saw revenue more than doubling and operating profits nearly quadrupling.

The company has been duking it out with Google and Microsoft (NASDAQ:MSFT) over email -- the three have been beefing up storage on their free email accounts -- and both Yahoo! and Google have been rolling out desktop-search software to compete against Microsoft in that arena as well. It's just part of the master plan of the online portals to play a bigger part in your Web surfing future -- and serving up plenty of contextual ads along the way.

So, yes, Yahoo! is doing just fine. Thanks for asking.

Some recent signs that things were going well in paid search:

  • InterActiveCorp sees what Yahoo! sees in paid search.
  • Yahoo! emerged victorious early in our Stock Madness 2005 contest but bowed out way too soon.
  • Talk about the company's latest moves in our Yahoo! discussion board.

Longtime Fool contributor Rick Munarriz is a huge fan of paid search and wants to see what Yahoo! will come up with to battle against Google's brilliant AdSense product, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.