Online advertising revenue grew $83 million or 15% to $655 million, reflecting continued growth in search advertising revenue, offset in part by decreased display advertising revenue. Search revenue grew due to increased revenue per search, increased volumes reflecting general market growth, and share gains in the U.S. According to third-party sources, Bing organic U.S. market share for the month of September 2012 was approximately 16%, and grew 120 basis points year over year. Bing-powered U.S. market share, including Yahoo! properties, was approximately 25% for the month of September 2012, down 160 basis points year over year.
OSD’s operating loss was reduced by higher revenue and lower cost of revenue and sales and marketing expenses, offset in part by higher research and development expenses. Cost of revenue decreased $91 million, driven by lower Yahoo! reimbursement costs and traffic acquisition costs. Sales and marketing expenses decreased $40 million or 23%, due mainly to decreased corporate marketing activities. Research and development expenses increased $32 million or 10%, primarily reflecting higher headcount-related expenses.