Microsoft reported Q2 earnings last night, with overall ad revenue up, mostly from display ads and a "modest increase" in search.
"Advertising revenue grew 20 percent over the quarter and we're happy with that," said Chris Liddell, Microsoft's CFO. "On the search side, we lost market share, and we're clearly not happy with that."
Increasing search queries contributed to search revenue growth on a year-over-year basis for the first time since the transition from Yahoo's paid search ads to AdCenter in the U.S. last year. But Microsoft is scaling back its revenue forecast from search this year, estimating revenue growth in the online services business between 3% and 8% for the year and 4% to 10% this quarter.
According to comScore's December numbers, Microsoft had a 10.5% share of searches last month -- down from just over 14% at the end of 2005.