Crisis or Opportunity: Yahoo's U.S. Advertising Chief Is Departing

Yahoo's top executive for business and advertising sales in the Americas is resigning, just as the Internet pioneer is struggling to turn itself around and raise its flagging revenues, Yahoo announced Thursday.

Hilary Schneider, executive vice president of the Americas, is leaving Yahoo (YHOO), the company where she rose through the ranks since joining in 2006. Her most recent responsibilities included overseeing all advertising sales in the Americas. Analysts say her departure is a good thing for Yahoo, given that the company has continued to struggle in the areas where Schneider had oversight, particularly in the second quarter.

Decision Time

To replace Schneider, Yahoo's CEO Carol Bartz, who is also running on borrowed time, must now make one of her most important executive hires. The question is: Would Yahoo would be better off with business operations and advertising sales reporting to one executive, or should it revert back to its previous structure, with an advertising top dog and a separate business executive. Earlier this year, Bartz saddled Schneider with both tasks after Joanne Bradford, the former U.S. advertising exec, quit. While some industry watchers questioned the wisdom of combining those responsibilities, others thought it made sense.

Either way, it's Bartz's decision alone to make. But the board will hold her accountable for the success or failure of that decision.

"The choice of Hilary's replacement is Carol's responsibility. She can ask for the board's views, but it's her decision," said one person familiar with the board's thinking. "She may seek advice from the chairman or the compensation committee, but hiring executives is separate from the board's [responsibilities]."

Does Advertising Experience Matter?

Meanwhile, another person familiar with the board's thinking said at the time of Bartz's hiring that her lack of understanding of the advertising world was an issue at the time. This person questioned whether she would be able to recognize a rockstar advertising executive if she met one, and how well she could evaluate performance.

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Trip Chowdhry, an analyst with Global Equities Research, said the fact that Bartz doesn't come from an advertising background should not hinder her. He pointed to Google (GOOG) founders Larry Page and Sergey Brin, noting that they lack advertising experience yet were able to surround themselves with a smart sales team.

Chowdhry believes Yahoo should seek another combo executive to replace Schneider, noting it reduces the potential for infighting between divisions.

Another Wall Street analyst believes would make more sense to keep them separate. "When you want to increase monetization of your operations [ie. advertising] and also grow the number of users, it's better to keep the jobs separate," the analyst said. For Yahoo, it would do well to concentrate on both.

In addition to Schneider's departure, AllThingsD, which initially broke the story, reports that David Ko, who oversees Yahoo's audience, and Jimmy Pitaro, vice president of media, are also leaving Yahoo. As Bartz continues to develop her team, these executives are part of Yahoo's constant game of musical chairs.

Yahoo issued a statement regarding Schneider's departure and also that of Ko and Pitaro:

The Internet company said Raymond Stern will oversee Ko's teams and duties. As for Schneider's position, Yahoo said it's currently seeking a new head of the Americas region and expects to make that announcement before the end of the year. In the meantime, Schneider will stay on to help with the transition.

Editor's Note: This post was updated on Oct. 2 to include Yahoo's statement.