Shuffle in Yahoo’s Sales Ranks

The streamlining and musical management chairs at Yahoo  continued today as the media company today said it would combine its search and display advertising sales teams in the U.S. to better serve its ad partners.

David Karnstedt, currently senior vice president of Yahoo’s Search sales business will lead the unified organization as head of North American sales. Karnstedt replaces Wenda Millard, Yahoo’s chief sales officer in the U.S., who will leave the company immediately to join Martha Stewart Living Omnimedia (MSLO) as the Chief Media Officer President.

Millard had overseen the display ad business, which Yahoo recently said would be below expectations for 2007.

“While Wenda was a big contributor to our success in the past, the industry has shifted and requires a different set of skills to take the business forward,” said Gregory Coleman, Yahoo’s executive vice president of global sales, in a statement.

Yahoo, which has been modernizing its ad sales strategy to better compete with rivals Google , Microsoft  and AOL, said the move comes as part of the steps the company has been making in 2007 to “organize product management, engineering, and distribution around marketing customers rather than advertising products.”

The adverting landscape is changing, Yahoo said, noting that advertisers are seeking platforms that roll search, display and video into one platform.

Citing a comScore study from last year, Yahoo said online users who were exposed to both search and banner display ad campaigns increased their share of page views relative to competitive sites by 68 percent. Purchases of an advertiser’s products and services increased 244 percent online compared to online users with similar behavior who were not exposed to these ads.

With results like these, it is clear why Yahoo is merging search and display advertising as it seeks to fortify its position in the competitive market for serving online ads.

“Integrating our world-class search and display sales teams under David’s leadership will allow us to better serve all of our advertisers’ marketing objectives ranging from brand awareness to direct response,” said Yahoo President Sue Decker.

Yahoo added that while the integration of Yahoo’s search and display advertising sales teams is underway, the company will make additional announcements about the structure of the organization and the executives that will lead it soon.

Karnstedt, who will continue to report to Coleman. joined Yahoo Search Marketing in September 2001. Prior to joining Yahoo, Karnstedt was a key member of the management teams at a number of pioneering internet companies including Wired Digital Lycos and Alta Vista.

Karnstedt’s promotion and Millard’s departure comes less than two weeks after the company announced its biggest move to date — the departure of CEO Terry Semel and the appointment of his successor Jerry Yang, one of the company’s co-founders.

There have been several changes at Yahoo since last year, thanks to the company’s declining ad sales, and tightening competition in the evolving online ad market.

Last July, Yahoo said its 2006 second quarter profits dropped 78 percent from the year before (due to a one-time charge) and announced its new Panama ad system would be delayed.

In September, Semel and then CFO Susan Decker warned analysts there had been a slowing in growth of advertising from two of the largest sectors, automotive and financial services.

Then, in November, the Peanut Butter Manifesto story hit the news, referring to the now-famous memo by senior vice president Brad Garlinghouse, who argued that Yahoo had spread itself too thin.

That helped set the stage for strategic and personnel changes.

Yahoo announced the departures of COO Dan Rosensweig, John Marcom, senior vice president of international operations, and Lloyd Braun, head of Yahoo’s media and entertainment group and assigned executives to head three groups for advertisers and publishers, audience and technology.

Later, CTO Farzad Nazem and Yahoo Finance general manager Peggy White also left the company.

Silver linings have been few and far between for Yahoo but the company’s Panama launch was one of them; comScore said that click-through rates for Yahoo-sponsored search ads were up.

However, in Yahoo’s most recent quarter, profits were down. Two weeks later, Yahoo agreed to buy the remaining 80 percent of Right Media it didn’t already own for $680 million in order to fortify its advertising offerings.

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