Yahoo's sales silos are disappearing with the firm's latest move to collapse its separate display and search advertising departments into one holistic operation. In the midst of major personnel changes, the company aims to counteract slowing growth in display ad sales, and to make it easier for advertisers to place integrated search and display campaigns.
"Our intention is to organize around customers, not around products, which is a huge move for us," said Yahoo's new Head of North American Sales David Karnstedt. "Before, with our product-centric orientation...it was possible you would have two separate sales calls," he continued. "Having those two separate calls did not make it as easy as possible for [advertisers] to purchase from us."
Karnstedt, who started with Yahoo in 2001, is replacing U.S. Chief Sales Officer Wenda Harris Millard, who begins her newly-announced role as president, media at Martha Stewart Living Omnimedia next month. Karnstedt will continue reporting to Yahoo EVP of Global Sales Gregory Coleman.
"Everybody has complained that Yahoo is relatively large and relatively silo-ed," said JupiterResearch Analyst Emily Riley. "Consolidating relationships would be a big boost for Yahoo," she added, noting the new structure should also streamline reporting, making tracking campaigns more efficient.
Though two departments will be made one, Yahoo plans to hire more sales staff, said Karnstedt. "We will aggressively continue to add people into our sales team," he told ClickZ News.
There's been some recent indication Yahoo would alter its sales structure. During its Q1 2007 earnings call, Terry Semel, the company's CEO at the time, said, "We are continuing to make some adjustments in our business...including aligning our sales force, broadening our advertiser tools, and expanding our ad network." Since then Semel has resigned and Yahoo founder Jerry Yang has taken the reins as CEO.
The sales adjustment is also part of the firm's efforts to address slower display ad growth, according to Karnstedt. For the first quarter 2007, Yahoo reported display ad revenue grew around 20 percent, compared to at least 25 percent growth the previous quarter.
By folding display and search ad sales into one division, it appears Yahoo is responding to a real advertiser need. Jupiter's Riley said among agencies she's "seeing a big increase in cross-tactic campaigns" that combine search and display advertising.
Though marketers have been talking about media integration for years now, "One of the major players in search [Yahoo] was treating them as two different forms of media," said Martin Laetsch, senior director of search strategy at SEMDirector. "It has been painfully difficult to buy with Yahoo...if you wanted to do a truly integrated media mix," he continued. The decision to combine the departments "shows [Yahoo is] serious in moving forward in both forms of media."
Advertisers and agencies are still trying to digest the news coming out of Yahoo over the past week since Semel quit, so it will take time to determine how shifts at the firm will affect advertisers and media buyers.
According to Karnstedt, one thing's for sure: There are more changes to come for Yahoo. The company plans to make additional announcements regarding internal structure and staff in the coming months.
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Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
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