Microsoft is searching for a major executive to run its world-wide online sales, said several sources close to the situation, even as talks with Yahoo about a deal to partner in its search and display advertising businesses continue.

“They need to find a way to make money in display,” said one source close to the situation. “Or, I guess, find a way to not lose quite so much.”

The software giant has been trying to build its online business for many years now, spending a lot of money and not getting very much traction.

In its recent quarterly results, in fact, Microsoft’s online services got hit badly, with a 14 percent decline in revenue from a year ago to $721 million. Losses doubled to $575 million.

Sources said Microsoft (MSFT)–which has hired headhunting firm Spencer Stuart to conduct the search–is looking for more execs to turbocharge the situation, with one criterion being that the person hired is “another ambassador to Madison Avenue.”

Last fall, it did that by hiring Time Inc. ad exec Robin Domeniconi to take over as the new VP, U.S., Microsoft Advertising.

That’s why the new sales candidate the company is looking for might only be for someone to lead Microsoft’s international ad sales, since the exec in charge of that business left in December as part of a mass of changes in the wake of the hiring of digital head Qi Lu.

Those changes included the departure of that exec, Global VP of Sales Bill Shaughnessy, as well as its top online ad sales exec, Brian McAndrews, and the rejiggering of its online sales unit.

In that switch, Microsoft said in a press release: “The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.”

The move to centralize, according to sources, has been controversial within the company, since it means all sales are being lumped into one megagroup.

That could all change dramatically again if there is any success in the talks Microsoft has been having with Yahoo (YHOO) about outsourcing its online display sales to the Internet giant. The pair have been discussing partnering over search and advertising.

While such a deal might not happen–Yahoo has been especially reticent to separate its search and display businesses–the two sides have been discussing several scenarios in a bid to compete with online giant Google (GOOG).

Among the latest ideas is one in which Yahoo would take over both search and display advertising sales and Microsoft would run the tech behind the scenes.

Such a deal would be a major shift for both companies in their business focus and would also tether them together.

Here is the chart of direct reports to Bartz with the unfilled-as-yet spaces at Yahoo (YHOO) in it (click on the chart to make it larger):

So, who should get the nod for each?

There are many likely candidates for the CFO role, of course, especially given that the person who gets the nod does not have to be an Internet exec and also that there are lots and lots of high-ranking financial folks more available then ever these days.

But Yahoo will probably opt for a CFO who can both weigh in judiciously on how to focus spending going forward at Yahoo (as one person close to the situation said to me: “Yahoo cannot just cut itself to greatness”), as well as be able to make deals.

One of the many names that have popped up as an interesting idea from a source is former Microsoft (MSFT) dealmaker Bruce Jaffe. The former VP of corporate development left the software giant in January of 2008, right before it made its failed bid for Yahoo, and has since worked as an adviser to Glam Media.

As for international, there are lots of potential candidates for that job too, such as London-based Joost CEO Mike Volpi (who is actually always on a lot of Web company job short lists) to the plethora of internationally-focused execs all over the map, so to speak.

But BoomTown is altogether perplexed at who would be good at the customer advocacy job, which sounds kind of squishy and unclear. Is it like a newspaper ombudsman or like the fine folks over at Consumer Reports?

Or is it meant to me someone who looks over all products and services at Yahoo to make sure those creating and tweaking them always have the consumer in mind?

Because, if that’s the case, it seems to me that is Job #1 for Bartz, as well as everyone working at Yahoo.

That said, my personal candidate: Martha Stewart–a closet geek and someone who can tell you when it’s a good thing.

Or not.

Another Web company, another management restructuring!

Yahoo (YHOO) reorg fever struck AOL today too, as its advertising head, Greg Coleman (pictured here), moved the exec chairs around his domain at AOL’s Platform-A unit.

Coleman–who actually once was Yahoo’s sales head before taking the new gig at the Time Warner (TWX) online unit earlier this month–is replacing some execs and elevating others. Also there is some sleepy ad-serving stuff about the migration to its ADTECH system.

In related news earlier today, BoomTown reported that AOL International head Maneesh Dhir was leaving.

You must all know the drill by now, after endless reorg memos today, so here’s the entire skinny in the memo Coleman sent out (also, after the jump, is the 2009 goals memo sent today by AOL CEO Randy Falco that says, let’s be honest, next to nothing):

From: Coleman, Greg
Sent: Thu 2/26/2009 7:00 PM
To: Platform-A@platform-a.com
Subject: Unlocking Our Potential

Dear Platform-A colleagues,

When I met with you earlier this month, we talked about the big mission we’re embarking on and the vision I have for our future.

Over the past year, you’ve done great work integrating Platform-A and creating a powerful business from the ground up. Platform-A now provides marketers the most comprehensive and cost-efficient tools and technologies for the digital advertising space.

Just today, we took another big step forward with the migration of our ad inventory to ADTECH–an incredible challenge and a big win for us and our advertising partners. My thanks go out to the technologies and ADTECH teams who made this happen.

I’ve also been inspired by what I’ve heard from people throughout the organization, many of whom reached out to me during my first few weeks here to express their confidence in our ability to succeed.

Now, after a year of transition, key acquisitions and integration, we need to turn our attention to unlocking the full potential of this great business. And we need to move aggressively.

This will mean changes in how we’re organized, particularly in our ad sales functions. Over the next few weeks, I will be rolling out a multi-tiered plan that will address our infrastructure, make necessary role changes and bring in talent where needed. I want to tell you about some initial steps we’re taking today.

First, Don Kennedy will be stepping down as head of ad sales, a role I will assume on an interim basis. Don and I agreed that his many talents are best served in a different capacity, and I look forward to working with him in the coming weeks to define that role.

In addition, Mike Peralta will be leaving Platform-A. I want to thank Mike for his contributions to the business, and wish him well on his future endeavors. His team will report temporarily to Mark Ellis.

In addition to his day-to-day responsibilities, Mark will also be working closely with me as an advisor as we work through the changes ahead. Mark is a veteran in the Internet advertising space, and in the short time I’ve been here, I’ve quickly come to value Mark’s insights into the market and Platform-A. I’ve asked Don to lend his keen insights as an advisor during this process as well.

We will also be holding two days of meetings next Tuesday and Wednesday with regional ad sales executives to discuss the plan and get their input.

As we think about our growth and our future, please know that our mandate is clear. Even in this economy, we must ensure we have the best sales teams and the best tools across the country to serve our clients and grow our share of the market.

I came to Platform-A because I know this business has an incredibly bright future. And I know that working together, and working closely with our colleagues in MediaGlow and People Networks, we will realize that future.

Greg

AOL’s 2009 Goals

Dear AOL colleague,

This year marks the third of our three-year turnaround plan for AOL. Over the past two years, we’ve transformed the company and focused on three key growth businesses–MediaGlow, Platform-A and People Networks–positioning AOL to succeed over the long term.

Last year, we saw progress in each of these businesses. MediaGlow experienced sustained and healthy increases in users and engagement, proving we can grow our Web audience by creating experiences that appeal to people’s passions. Our People Networks unit embarked on a series of innovations and integrations that will set our social media experiences apart from the competition. On the advertising front, we integrated our acquisitions and made progress in other areas, although we continue to face challenges in premium display ad sales, which we are aggressively addressing.

If 2008 was about aligning our company against our core businesses, this year is about executing on our goals in what’s sure to continue to be a difficult market.

To succeed, we’ll need to continue operating as efficiently as possible, taking advantage of every available opportunity and remaining focused in a noisy marketplace. Our 2009 goals are designed to provide that focus. The goals may look familiar to you, which is a testament to the fact that our strategy over the past two years is the right one. As before, each of these goals will have specific metrics attached to them, which your business leaders and managers will be communicating in the near future.

Publishing. Over the past 18 months, we’ve reinvented our approach to programming, and as a result we’re successfully and efficiently reaching a younger and more valuable audience. This year, our new MediaGlow business unit will build on this momentum, launching 30 new edited niche sites and thousands of automatically programmed sites, creating original programming in our Los Angeles and New York studios and growing our audience worldwide, while continuing to enhance our ability to monetize our programming.

Advertising. Platform-A today offers advertisers easy access to the largest reach and the most sophisticated set of advertising tools available online, thanks to the integration last year of our seven advertising acquisitions. This year, we will build on Platform-A’s unmatched strengths to help marketers fully harness digital media to build brands and enhance online performance, worldwide.

Social Media. People Networks’ mission is to connect people with everyone and everything they care about. Last year, the group focused on integrating Bebo, AIM, ICQ, Goowy, Yedda, SocialThing!, Userplane and our other community properties, which combined reach more than 90 million worldwide. This year it will launch a series of innovations that leverage the strengths of this integration, starting this month with breakthrough updates to Bebo, and proceeding to a program to socialize the Web, updates to AIM and much more. In 2009, People Networks will create the most engaging and useful social media services available with the goal of making it simple for consumers to live their lives online.

Products & Technologies. In 2008, the Platforms team grew the Search business worldwide by more than 7% year over year and the MapQuest and Commerce & Marketplace teams showed strong profitability and feature innovation. At the same time, the global publishing and Relegence teams helped build out the systems that would become MediaGlow. The Products team focused its efforts on core products–Mail, Mobile, Desktop and Toolbars–that offered us the best opportunities for growth, while exiting dozens of underperforming ones. This year, the combined Platforms and Products teams will continue to innovate on these core products and services. The Technologies team will continue to improve our ability to launch and scale new sites and manage our data centers and network as efficiently as possible.

Access. Over the past two years, the Access team has done a remarkable job of managing this business, expanding margins, improving our ability to convert subscribers to free users and cutting costs, while maintaining the quality of the service. Access continues to be an important source of revenues and profit for the company, and this year, the team will continue to deliver in these areas.

Cost Management. Our efforts to effectively manage costs across the board have been a significant success, positioning AOL for the troubling economic times we currently face. In 2009, we will continue to look for ways to prudently manage our business and align costs with our ad-supported business. This isn’t just about cutting costs, it’s about smart resource allocation.

Living Our Values. Achieving our goals will mean nothing if we lose site of our company’s values. Living our values – integrity, collaboration, inclusiveness, outward focus, innovation – is a prerequisite to hitting our numbers. In 2009, we will continue to embody all of our company’s values and behaviors in everything we do.

You know as well as I do that this year will present us with new trials, new surprises and new opportunities. I’m confident that by working together, guided by these goals and our shared values, we’ll achieve much in 2009.

Thanks for everything you do every day to make AOL great.

Randy

Goodness gracious, make it stop!

You must know by now how much BoomTown loves internal Yahoo (YHOO) memos. But this is getting ridiculous.

It’s been like a flash flood after a long drought at Sunnyvale HQ today, as Yahoo CEO Carol Bartz turns on the fire hose of a whole lot of communicating.

A lot. A real lot.

“I know you guys have reorg fatigue,” wrote Bartz, in the latest email to employees about the management reorganization finally announced this morning.

Also memo fatigue at All Things Digital HQ, if you can believe it.

Okay, I give, Carol! Well, for now, until another juicy internal memo you aren’t handing out freely lands in my inbox, for example, such as one about a search deal with Microsoft (MSFT). I’d like one of those to go, please!

But, in a gesture of a leak-free peace (can the drop-kick bounty be suspended for just today?), I am posting this last memo about the management reorganization from Carol “Chatterbox” Bartz.

(Although, I wish she would stop insulting the press, as she does below again. We are just doing our job–and very accurately, as it turned out–yet the jibes continue. Which is odd, frankly, given that Bartz has had mostly glowing coverage in the media her entire career.)

But Bartz did seem to leave a little mystery in the email still, as if even more rearranging were to come.

Writes Bartz (my bolding):

“As soon as decisions were made, I wanted you to know about them–even if that means we don’t have all the details nailed down yet”.

Wait, are the deets all nailed by Bartz’s productive hammer or aren’t they?

At least, thankfully, the note is capitalized properly, unlike the quaint no-caps stylings of former CEO Jerry Yang.

In any case, if you just can’t get enough, here is Bartz’s reorg blog from this morning and her new management structure memo too.

And here is her entire email on the reorg to employees:

From: Carol Bartz
Reply-To: Carol Bartz
Date: Thu, 26 Feb 2009 09:02:49 -0800
To: “all-worldwide@yahoo-inc.com”
Subject: Our New Organization

Yahoos,

As I’ve gotten to know Yahoo! over the past several weeks, I’ve developed a point of view on how our organization should be structured to set us up for success.

Our goal is simple: to consistently deliver awesome consumer and advertiser experiences, everywhere in the world we do business. Delivering great customer experiences is everyone’s job at Yahoo!–and each part of our organization will have a clear role in making that happen every day.

The timing of this announcement is important. As soon as decisions were made, I wanted you to know about them–even if that means we don’t have all the details nailed down yet. Yes, there’s been a lot of speculation in the media over the past few days…that’s been a little frustrating, but I’m not willing to speak publicly about decisions before they’re final. Today, they are–so I’ll lay out our new organizational structure for you now.

I know you guys have reorg fatigue. Hang in there–our intention is to leave this structure in place for two to four years. We’ll continue to make adjustments as needed, but we expect this core structure to stay put.

The structure outlined below will enable us to make big improvements in our product quality and operational efficiency. Part of that is simplicity–I’m frankly amazed at how complicated some things are here! We’ll have much clearer decision making and accountability. Product and regional teams will share responsibility for revenue targets and expense management, but we’ll have one P&L, for which I’m accountable.

We will also be in a better position to really listen to and understand our customers–both consumers and advertisers. I think we’ve gotten into the habit of focusing internally too much and we sometimes forget who we’re here to serve. You’ll notice that our management structure puts a renewed focus on the customer, with stronger feedback loops across the company…and they all come through me.

Also, as you know, no organizational structure is a substitute for collaboration, communication and trust. We’ll all need to evolve our behavior a bit–as teams and as individuals – to make this structure work the way it’s designed.

So here’s the overview, with the roles that will report directly to me. As you’ll see, some of our leaders are still to be determined. I know you’ll
want more detail than what’s below–you can learn more on Backyard: http://backyard.yahoo.com/ourorg .

Products: We’ve combined Tech and Product groups under one roof, led by Ari Balogh as EVP Products & CTO. Ari’s charter is to deliver global products that enable extraordinary consumer and advertiser experiences. Ari’s direct reports now include one leader for each product group–we’ve taken care of the “two in a box” problem.

One important note: The Connected Life team has been integrated into various parts of the new organization. Our mobile strategy remains a key part of Yahoo!’s focus going forward and all of our product groups will own mobile innovations. After leading Connected Life for four years, Marco Boerries has resigned from the company to spend more time with his family in Europe. We thank Marco for his important contributions at Yahoo!.

Regions: There are now two: North America and International. As I’ve said before, international growth is critical for Yahoo!, which has become too reliant on its U.S. business over the years.

The regions deliver Yahoo!’s products, programming and services to consumers, partners and advertisers in local markets. They will partner closely with the newly formed Regional Solutions & Products group in Ari’s organization to help drive a significant shift in how Yahoo! develops products for different geographies. The goal is to have global platforms on which regional product offerings are based.

The North American region–comprised of the U.S. and Canada–is led by Hilary Schneider. The leader of our International region, to be hired soon, will be responsible for a cohesive Yahoo! global strategy and seizing our international growth opportunities. Until we determine who’ll lead the International region, Rose Tsou (Asia), Rich Riley (Europe) and Keith Nilsson (Emerging Markets) will continue to report to me.

Marketing: Elisa Steele will be joining Yahoo! as our Chief Marketing Officer (CMO), effective March 23. Elisa joins us from NetApp where she was SVP, Corporate Marketing. Previous to NetApp, she held executive positions in marketing at Sun Microsystems. Elisa will oversee our global marketing strategy and provide direction for our marketing function. She’ll bring together the various Yahoo! marketing teams that have been spread across the company. Reporting into Elisa will be Brand Marketing, Audience Marketing, Corporate Communications, Insights, Policy & Privacy, Community Affairs and related central teams. I’m delighted to have Elisa joining the team.

Customer Advocacy: As I said, we can do much better in hearing the voice of the customer across Yahoo!, and incorporating what we hear into all of our work day-to-day. We have opened a search for a leader, who will oversee Customer Care and Ad Operations globally with the goal of improving how we support Yahoo!’s users and advertisers. In the interim, these teams will continue to report to Hilary.

Service Engineering & Operations: This new team is responsible for delivering common technology services at scale, including application management and infrastructure. No matter how cool our products are, the customer’s experience won’t be great unless our applications consistently deliver. Note that we’re bringing Service Engineering together as one group because these engineers bring expertise that is best applied horizontally. Leading this organization is David Dibble, who joined Yahoo! in December. David’s team also will be accountable for delivering more effective corporate IT systems.

Corporate Functions: Blake Jorgensen will be leaving Yahoo! and I am searching for a new CFO. Blake will remain through a transition with his successor, and I want to thank Blake for all of his great contributions to Yahoo! over the past two years. Mike Callahan will continue to lead our Legal team, and David Windley leads our Human Resources function. Joel Jones joins the team as my Chief of Staff.

So that’s the high-level view. These changes are effective immediately, but we’ve got more work to do in filling out the structure of each group. In the short term, this transition will be challenging for many of our people. My executive staff will be working with their organizations as quickly as possible to create further clarity. For example, we’ll need to recast budgets and adjust work areas so we have the right people working side-by-side.

I want to thank all of you who’ve shared your ideas and views with me since I arrived. Several leaders across Yahoo! came together to design this new structure–I’ve been very impressed with their dedication to the right outcomes, particularly how they’ve embraced the need to eliminate the silos that have been a drag on this organization for so long.

I think this organizational structure has the potential to solve many of the issues you’ve helped me better understand. Of course, new issues will emerge. But I know we’ll be aligned and nimble in tackling them together.

This is a tremendous, proud company with a powerful brand, great products and a bright future. Now’s the time to get more focused than ever on delighting our users and advertisers. Let’s show them how great Yahoo! can be.

Carol

It’s pretty much what BoomTown has been reporting all week about the reorg.

Top-down simplification, which is another word for: Carol rules over Yahoo (YHOO).

CTO Ari Balogh gets a lot of stuff as new head of products, and so does U.S. head Hilary Schneider, including mobile, as EVP of North American Region. Both report to Bartz.

Unmentioned, but Audience Products head Ash Patel is still in. So is General Counsel Michael Callahan.

New chief marketing officer is Elisa Steele, who come from NetApps (NTAP). Bartz happens to be on the board of NetApps, by the way.

New International head TBD.

Bartz also sent an email to employees about the changes.

Here is the entire memo:

New Yahoo! Management Structure Overview

February 26, 2009

· Our goal as a company is simple: to consistently deliver awesome consumer and advertiser experiences everywhere in the world we do business. So we’re creating an organization to enable improvements in our product quality and operational efficiency, as well as clear decision making and accountability.

· Tech and Product groups will be combined to create a single organization called Products. Products will be led by Ari Balogh as EVP of Products and CTO, reporting to Carol Bartz, with the goal of enabling extraordinary consumer experiences tied to compelling advertiser and publisher offerings. This organization is responsible for the vision, strategy, and quality of every product we create–regardless of region, device format or category.

· There are now two regions–North America and International. The regions are responsible for delivering Yahoo!’s products, programming and services to consumers, partners and advertisers in local markets. North America will be led by Hilary Schneider, EVP, North American Region, reporting to Carol Bartz. International’s leader will be hired soon.

. Mobile will continue to be a key priority for Yahoo!. Going forward, David Ko will lead the mobile business, strategy and monetization teams for Yahoo! (Head of Global Mobile Business, reporting to Hilary Schneider). All of our product teams will be responsible for incorporating mobile innovations into their products.

· A Chief Marketing Officer (CMO) role has been created to oversee our global marketing strategy and provide direction for our marketing function. Today, we named our new CMO, Elisa Steele. Elisa starts on March 23. She will bring together the various marketing teams that have been spread across the company.

· A new Customer Advocacy group will help us to better hear the voice of the customer (consumers/advertisers) across the company and incorporate what we hear into all our work throughout Yahoo!. We will hire a new leader for this team.

· The newly created Service Engineering & Operations (SE&O) team will be chartered with delivering common technology services at scale, including application management and infrastructure. The team will be led by David Dibble, SVP of SE&O. We’re bringing Service Engineering together as one group because these engineers bring expertise that is best applied horizontally.

· Our corporate functions will consist of HR led by David Windley, Legal led by Michael Callahan, and our CFO is to be hired, with Blake Jorgensen remaining through the transition. Joel Jones will serve as Carol Bartz’s chief of staff.

· This structure is designed to last two to four years; however, we’ll continue to make adjustments as needed. But we expect this core structure will stay in place.

· These changes become effective immediately.

This morning, FriendFeed, which is a kind of content delivery version of Twitter, went international, launching in six new languages–German, French, Spanish, Japanese, Russian and simplified Chinese.

Now live, the move is a natural extension for the Mountain View, Calif.-based start-up–which was founded earlier this year by a small gang of ex-Googlers: Bret Taylor, Paul Buchheit, Jim Norris and Sanjeev Singh. The company says that one-third of users already use FriendFeed in languages other than English.

More languages are planned, said the company, which specializes in super-aggregating updates of all kinds for social-networking and news items in an ongoing feed from places like Facebook, YouTube, Digg, Twitter and Flickr.

Given all the dissipated ways people communicate on the Web, FriendFeed lets users collect all these links, some of them in rich media and some just text messages, to share publicly or privately.

I find the service very useful and compelling, so I paid a visit to its HQ last week to chat up Taylor and Buchheit.

We talked about a range of topics, including–my favorite–monetization, or lack thereof, of a lot of terrific Web 2.0 services like FriendFeed and Twitter.

The pair, in a less overt manner than Twitter’s CEO Evan Williams, did acknowledge the focus on growth over revenue, although they did seem intent on figuring out a true business plan sooner than later.

FriendFeed certainly has time to do so–it is a small and inexpensive start-up with a dozen employees, funded with only $4 million from Buchheit and Singh and $1 million from Benchmark Capital.

Here’s the video (excuse my gruff-cold-and-cough voice):