Yahoo shakes up ad sales team

SAN FRANCISCO (Reuters) -- Yahoo Inc. said Sunday the Internet media company was merging the two main parts of its U.S. advertising business under one sales executive, David Karnstedt, and that veteran advertising sales executive Wenda Harris-Millard has left the company.

Recently elevated Yahoo (Charts, Fortune 500) President Susan Decker said in a phone interview that the consolidation of Yahoo's two advertising arms -- display and Web search advertising -- reflects growing demand by customers for campaigns that combine both types of ads, with newer types of video advertisements.

Less than one week after being named president of Yahoo, Susan Decker has shuffled the ranks of the company's ad sales force.

Video More video CNN's Maggie Lake reports that Yahoo CEO, Terry Semel, has resigned. Play video

The restructuring of top U.S. sales management follows the company's warning last week that a nearly year-old slowdown in its display ad business -- the online banner ads and other methods -- would lead to weaker second-quarter results.

Separately, Martha Stewart Living Omnimedia (Charts) named Harris-Millard as president of its media business, effective July 16. Considered one of Madison Avenue's most influential executives, Millard is charged with beefing up Web operations for the lifestyle media and merchandising company as well as running publishing and broadcasting.

Karnstedt, currently senior vice president of Yahoo's Search sales business, will lead the unified organization as Head of North American Sales. He will continue to report to Gregory Coleman, executive vice president of global sales.

"When combined, the two organizations will deliver profoundly better results than when delivered separately," Coleman said.

Yahoo is reacting to the shift by consumers to social networking sites where users feature share writing, photos and video rather than spending as much time on Yahoo's own media properties, Decker said. The company has faced an uphill battle against Google's (Charts, Fortune 500) YouTube as well as News Corp.'s (Charts, Fortune 500) MySpace.

The restructuring of its advertising sales team follows six months of restructuring moves to consolidate its display and search businesses and comes a week after Chairman and Chief Executive Terry Semel was replaced as CEO by co-founder Jerry Yang. Semel will remain nonexecutive chairman of the board.

Last Monday, Yahoo warned that slower growth in display advertising would offset a better-than-expected performance from its recently upgraded search advertising operations.

As a result, it said it expected second-quarter revenue to land in the lower half of its previously stated outlook which, excluding the cost of payments to advertising partners, was projected in April at between $1.2 billion and $1.3 billion. Ad marketing generates more than 80 percent of Yahoo revenue.

Harris-Millard, a 30-year veteran of the advertising and publishing industries, had joined Yahoo in 2001 and helped the company gain credibility with top corporate advertisers as they considered shifting ad budgets from traditional media online.

Karnstedt's career in online advertising stretches back to 1996, when he worked for Softbank Interactive Marketing, which functioned as Yahoo's early outside advertising sales force.

Like Harris-Millard, he also has been heavily involved in efforts to win acceptance for online advertising techniques among corporate advertisers,

The plan to unify Yahoo's two sales organizations has been in motion since February. Karnstedt said completing the process will take another two quarters.

An integrated approach to online advertising has become increasingly important as Yahoo seeks to boost the share of its advertising business on sites off its own media properties.

As examples of this, Decker pointed to deals Yahoo has to supply both display and search advertising for online auctioneer eBay Inc. (Charts, Fortune 500), Comcast Corp. (Charts) and a U.S. newspaper consortium made up of 15 companies and more than 250 newspapers.