Yahoo's Sales Staff Exodus Hits Display Ad Business
Yahoo blamed a dip in revenues and display on sales staff upheaval and inexperience.
Yahoo’s net revenues dipped 5 percent during the second quarter of this year compared with the same period in 2010, largely due to sales staff upheaval. The company reported revenues of $1.08 billion for the three months ending June 30, excluding traffic acquisition costs, down from $1.13 billion in Q2 2010.
Addressing investors on a conference call today, Yahoo’s CEO, Carol Bartz (pictured left), suggested turmoil among its sales force played a major role in its reduced performance. U.S. display revenues were “unexpectedly down,” she said, while display revenues in Europe and Asia continued to grow.
“It’s not about new competitive developments, it’s not about the economy…. The root cause was changes to our sales and leadership force,” Bartz said, explaining that those alterations lead to accelerated turnover of its personnel, and ultimately left it unable to effectively monetize its inventory as salespeople transitioned to and from the company.
According to Bartz, Yahoo’s sales efforts are now “moving in the right direction,” since the firm has “hired a lot more people.” She conceded, however, that many members of its sales staff are new to their roles and remain unfamiliar with the company’s products and its clients. “We have a lot of work to do,” she said, implying that the weakness might also be evident in its Q3 results later this year.
As a result of its staffing issues the company said much of its premium inventory – typically packaged and sold direct to advertisers and agencies – was instead pushed through its exchange during the quarter, garnering diminished revenues. “We didn’t have enough salespeople in front of the big clients,” Bartz admitted, adding that inventory was often sold to non-premium or direct response advertisers instead.
Meanwhile in the search space, Yahoo’s revenues decreased 15 percent to $371 million, excluding traffic acquisition costs. Bartz reiterated the message she conveyed last quarter, stating that its partnership with Microsoft was taking longer than expected to pay off due to continued technical challenges.
As a result, she added that the revenue per search levels experienced pre-Microsoft would not be achieved until the end of the year.
