Yahoo Exodus Leaves Advertisers Confused About Strategy, Sales

Perceived Lack of Vision, Too Broad Array of Businesses Lead to Criticism of Portal

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NEW YORK (AdAge.com) -- As several senior Yahoo execs leave the building this week, Yahoo's biggest clients -- advertisers -- are asking what that means for them. And that they don't know isn't a good sign.

"I am not sure what Yahoo wants to be," said Edward Montes, exec VP of Havas Digital. "What is it doing with RMX, Associated Content, News, Finance, Mail, Mobile? There is not too much in the way of information on anything." Mr. Montes, who used to work at Yahoo, said that as a result of the portal's inability to define itself, all the attention has been focused on the executives' departures. "The changes at the top are disheartening," he continued. "Advertisers need a strong Yahoo as it is an important part of the web advertising ecosystem."

Embattled Yahoo CEO Carol Bartz announced the departures of top company brass -- Exec VP Hilary Schneider; Senior VP David Ko; and Media VP Jimmy Pitaro -- late yesterday, responding to a report from AllThingsD's Kara Swisher, who first wrote about the impending personnel changes. The company said a replacement for Ms. Schneider, who led sales, will be named before the end of the year.

The unfortunate circumstance of all three executives leaving at the same time fits into a brewing narrative that the company lacks clear direction -- but its biggest area of confusion is around advertising.

The Sunnydale, Calif.-based internet company has often been criticized for failing to master a broad array of businesses, from content and advertising to search and e-mail. The portal will soon implement a deal inked with Microsoft, allowing the software giant's Bing search engine to run Yahoo's search tool. In exchange, Yahoo will handle premium search advertising sales. But now Ms. Schneider's impending exodus puts that arrangement under new scrutiny, as well as ad sales in general.

Other advertising executives have also noted Yahoo's lack of direction, but this mass exodus may signal an opportunity for Yahoo to better define itself by hiring appropriate replacements.

"If they decide what their core business is, say if advertising and content were to become their core areas, then I hope that bring in people with expertise in that area," said Carrie Frolich, managing director at MEC Global. "They're in a very broad business, so they've brought in people with broad expertise in the past."

Yahoo has traditionally had a difficult relationship with the advertising industry, Mr. Montes said. "Yahoo did a very poor job of communicating to agencies and advertisers when they decided not to fill Joanne [Bradford's] job, and this week seems more of the same," he said.

Yahoo lost its top sales executive earlier this year when Joanne Bradford left to join Demand Media. After months of searching for a replacement, Ms. Schneider was named head of sales along with her existing duties. As part of this change, the company re-organized its sales team to include four direct reports to Ms. Schneider, three of whom were already part of the company: Mitch Spolan, head of field sales and agencies; Seth Dallaire, mid-market and audience channels sales; and Frank Weishaupt, head of sales development, operations and marketplaces. The fourth person had yet to be named.

One former Yahoo executive said the company had always been unsure of its footing in the sales arena. "It was hard to make sales a priority sometimes," this person said.

Another person inside the company said it will most likely have to go outside to find Ms. Schneider's replacement. "There's no one in-house who has the depth of experience and the capability that Hilary has," this person said. "They have a lot of holes to fill."

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