• by Mark Walsh  @markfwal, December 6, 2006

Speaking at an industry conference in New York Tuesday, Yahoo's advertising sales chief, Wenda Harris Millard, downplayed the company's slowing ad growth and dismissed an internal memo that surfaced advocating a complete overhaul of the Web portal. Just hours after she spoke, however, rumors surfaced that company executives met Tuesday afternoon to discuss a major shake-up (see related OnlineMediaDaily story).

At the UBS global media conference, Millard emphasized that Yahoo was on track for another strong year in ad sales, although the rate of growth may have slowed in some areas compared to previous years.

Yahoo's branded ad revenues are likely to grow only 20% this quarter--down from 40% last year, according to a Merrill Lynch analyst report issued last week.

Millard also told a crowded room at the conference that the so-called "Peanut Butter manifesto," calling for a major reorganization at Yahoo and job cuts of up to 20%, could apply to any other company. "I looked at it as pretty silly in terms of the noise that was made of it," she said.

She explained that the memo exaggerated challenges that were part of the normal course of business for any high-growth company. "I found it annoying," Millard said.

Yahoo has also been criticized for failing to develop a social networking property to compete with hugely popular sites such as MySpace and YouTube. Talks to acquire college-oriented site Facebook reportedly stalled in October despite a reported $1 billion offer for the company. In its latest social media setback, Yahoo confirmed this week that it had ended a short-lived content-sharing partnership with CurrentTV.

Millard reiterated that social media and user-generated content are critical to Yahoo's overall strategy. But she conceded that social properties are more difficult to monetize because they often rely on the fickle tastes of youthful users. "To hold them, you have to be very careful, not just about the content, but about the advertising," she said.

By combining consumer-generated and professionally produced material--as on its video-sharing site "The 9"--Yahoo intends to draw young viewers without scaring off marketers. "We don't represent as much risk as some of the others," she said, referring to social networking sites.

In addition to boosting ad dollars from social media, Yahoo also plans to push harder to sell its remnant ad inventory. That effort is reflected in the 20 percent stake it recently made in Right Media, which runs an online ad exchange for auctioning remnant inventory. "One of the things we need to do a better job of is monetizing non-premium inventory," said Millard.

Until recently, she noted that Yahoo had focused on generating brand advertising mainly from Fortune 1000 companies at the expense of remnant inventory. To help remedy that imbalance, Yahoo ad sales staff is now allowed to package premium and non-premium together, said Millard.

While Yahoo's delayed Panama project is aimed at improving search marketing, Millard said it would also have an impact on display advertising. That's because the new system would eventually also handle display ad placement. She said Yahoo hasn't discussed Panama in connection with display advertising until now because Wall Street has been "obsessed" with the company improving paid search.