Yahoo "completely rewiring" for online advertising growth despite Microsoft talks

NEW YORK — In the latest effort to placate restless investors, Yahoo President Sue Decker laid out plans Wednesday to build the company's online advertising operations, and Yahoo announced a slew of new partnerships.

The push aims to prove either that the struggling Internet pioneer can go it alone or that Yahoo is worth more than the last offer from spurned suitor Microsoft.

The two companies are still in "ongoing, engaged" conversations about various kinds of partnerships, Decker said.

Shareholders led by billionaire Carl Icahn have been calling for the head of Yahoo co-founder and CEO Jerry Yang. Icahn and other investors say he improperly thwarted Microsoft's advances.

Decker told a digital-advertising conference in New York on Wednesday that she and her colleagues were "completely rewiring" Yahoo to better coordinate sales efforts across parts of the company's operations, which had worked as silos.

She noted Yahoo has millions of potentially lucrative relationships with e-mail users and a separate group of people who use the photo-sharing service Flickr.

"We have the largest latent social network in the world," Decker said.

Sites that exist to serve as networks, such as fast-growing Facebook.com and News Corp.'s MySpace, have become investor darlings for their ability to deliver marketing messages in a casual online social environment.

Yahoo has fallen behind Google in search advertising effectiveness, but Decker said it has been steadily closing the gap.

Speaking to a group of reporters, also Wednesday, Decker said Yahoo intends to build its already considerable search abilities to offer combined packages of advertising to marketers.

"Our ambition is to be a principal in both search and display" advertising, Decker said.

Meanwhile, in a letter to Yahoo on Wednesday, Icahn said he would press for removal of the board if it didn't scrap a severance plan adopted after Microsoft began its takeover attempt Jan. 31.

The plan could have raised Microsoft's costs in taking over Yahoo by as much as $2 billion.

Decker said the company was proceeding with its advertising partnerships and other projects despite distraction from the Microsoft bid and resulting protests from investors.

"I'm proud to say it hasn't affected our road map at all," Decker said. "In a way, it has had a motivational effect."

Yahoo announced several expansions of its advertising efforts Wednesday, including a deal to sell all the display and video advertising on Walmart.com, the online store run by Wal-Mart Stores.

It also said it would stream TV shows from CBS and announced 94 new members of a consortium that will begin selling online advertising across newspaper Web sites later this year.

David Hallerman, senior analyst with eMarketer, a New York-based online research company, said Yahoo was well-positioned to benefit from the coming growth in online display ads, given its long expertise in the field and vast online reach.

Revenues from online display ads haven't grown nearly has fast as search, which is text-based instead of visual and far easier for advertisers to buy. Display ads come in a variety of shapes, sizes and placements, which advertisers can find confusing.

Hallerman stopped short, however, of saying Yahoo would become the leading player in online display ads, an area Google entered with its purchase of DoubleClick.

Yahoo would likely do "better than most," he said.