Publishers are bad-mouthing ad networks, only to offer the smaller publishers who really need them their own networks instead. That's not cutting out the middleman to protect brands — that's steering away interlopers from outside the media business, while jealously guarding their relationships with Madison Avenue. Either way, smaller publishers which can't afford their own salespeople will get taken to the cleaners. It's just a question of who drives.

Google will put AdSense against almost any content. Watching Google make its billions, rival ad networks decided they should too, flooding the market with inventory sold at ever-dropping rates. The problem with Google search, in which ads only show up when customers literally ask to see them, is that now all ad-supported Web companies and ad networks think they can create technology that will target advertising equally as well — even though Google search-ad targeting is just a crude keyword match, constantly improved by click-through data.

Yahoo lost sight of who they are and who their customers are. Yahoo's perception is that their only competitor is Google. But 95 percent of their revenue comes from advertising — so their competitors are really the broadcast TV networks. They think they're in the search game, when they should really be in the brand advertising game.... Advertising is a business that is both art and science. The merger focuses unduly on science. With Google-Doubleclick, and Yahoo-Microsoft, it is as if the scientific community is taking over advertising. And advertising is not about science.

That early IPO — a preemptive strike against long-forgotten competitors — was a blessing and a curse. It was great PR, but it also meant that Yahoo had to please shareholders from an early age.

In the '90s, it did so with aplomb. No one personified Yahoo's cockiness more than its president, Jeff Mallett. A former soccer player, Mallett was more often the public face of the company than its reticent CEO, Tim Koogle. He often was quoted when Yahoo struck a large advertising deal; he was an expert at squeezing cash and stock from startups desperate to get traffic from Yahoo. Mallett had his share of mistakes, like the $6 billion purchase of Broadcast.com from Mark Cuban in 1999. But he was, at the least, bold and decisive.

Terry Semel became CEO in 2001, pushing Mallett aside. A new management team came in, full of ad-sales specialists. From 2001 through 2005, Yahoo patiently courted Madison Avenue, building a formidable banner-ad business with blue-chip clients.

Semel also got Yahoo into the search business, buying Inktomi and Overture. But he failed to capitalize on their promise. Many insiders blame Sue Decker, then Yahoo's CFO, now its president, for milking those businesses for cash while Google was investing millions in its algorithms. Semel's other big acquisition push into user-generated content brought it properties like Flickr and Del.icio.us. But it stalled when prices started to rise in 2006. Semel balked at paying big prices for YouTube and Facebook, and they slipped from his grasp.

The rise of Sue Decker roughly parallels the decline of Yahoo. Decker is — no, was — an expert at catering to Wall Street, and a killer at board-room politics. Insiders believe she edged out Dan Rosensweig in a 2006 reorganization. She then, they say, lobbied the board to oust Semel as CEO, using Rosensweig's departure as part of the rationale. Cheeky, but clever.

Both moves backfired on Decker. She'd hoped to put Rosensweig in a lesser role, but he balked and left the company without anyone running its content businesses. Semel left, but Decker did not get the CEO job she'd hoped for. Instead, the company was left looking rudderless, with founder Jerry Yang stepping in as CEO.

Another Decker mistake: Her disgraceful treatment of Wenda Harris Millard, the company's beloved U.S. sales chief. When Millard told Decker she was leaving for Martha Stewart, Decker reacted furiously, locking Millard out of her office and issuing a press release that suggested Millard was out of touch and had been fired. Unsurprisingly, Yahoo's banner-ad sales have suffered since Millard's departures.

Which brings us, more or less, to the present. It's not surprising that Microsoft seized this moment to issue its $44.6 billion offer. Yahoo's poor earnings and gloomy forecast provided one opening; management's incompetent dithering over layoffs provided another.

It's possible that Yahoo might somehow escape Microsoft's grasp. But whatever course Yahoo takes from here, it's clear that it will be even further diminished. Yahoo will be best remembered in business schools, where it's taught as a case study: How quickly tech empires can fall.

In 2004, the advertiser spent 3 times more money on Google than Yahoo. In 2005, the advertiser spent the SAME amount on both sites. In 2006, the Google-Yahoo ratio climbed back to 3 to 1. In 2007, the Google-Yahoo ratio will be a startling 9 to 1.

In Millard, Yahoo had an executive who commanded her employees' respect and admiration. But she was brutally pushed out by Decker, in an episode that's still talked about — including Decker's laughably clumsy attempt at a reconciliation, a gesture undertaken purely for keeping up appearances. Decker is clearly a brilliant strategist — except when it comes to managing people, a field where she clearly struggles.

And her apparent second-in-command, Hilary Schneider, is little better. A memo to the staff announcing Kelley's departure ends with this note: "Thanks in advance for your continued focus." In other words, dear Yahoos, please stop looking for new jobs and speculating about who's next to go. Schneider, for form's sake, wishes Kelley "best of luck." She should have saved some for herself. And Decker.

As you may have heard, on November 2, Cammie Dunaway will leave Yahoo! to take on a new challenge. In her 4 1/2 years, she built an award winning direct marketing team; improved our customer insights; and found creative ways to improve our brand. Cammie has strengthened the Marketing function and built a strong bench of creative talent. I'd like to thank Cammie for her leadership and dedication and all that she has done for Yahoo! I wish her the best in her future endeavors.

Since the formation of the President organization, Cammie and I have discussed the best way to align the Customer Experience Division (CED) with our new purpose and strategies. In support of our "Must Buy" big bet we have already moved advertiser and publisher marketing into the Global Partners Solutions (GPS) division. We will now take this opportunity to move a number of functions to support our consumer "Starting Point" big bet and initiate a more dedicated focus of insights as part of our core Yahoo strategy. Therefore we are making the following changes.

Yahoo! Network Marketing

The following teams will now report into the Yahoo! Network Division (YND):

• Audience "Go to Market" team led by David Riemer
• Direct Marketing led by Nick Besbeas
• Consumer/Customer Innovation led by Karin Timpone
• Customer Care led by Laura Narducci

We will take the next few weeks to determine the head of a new YND Marketing organization. In the meantime, David Riemer will continue to be the point of contact for YND marketing efforts.

Strategy and Insights

Given the important role of insights to our company strategy we are aligning the Customer Insights organization with Corporate Strategy so we can better leverage insights across Yahoo, globally. Therefore, Peter Daboll will now report to Gerry Horkan, head of Corporate Strategy.

Customer Experience Division

The following teams will now comprise the Customer Experience division:

• The Brand team led by Allen Olivo. Jorge Consuegra will report to Allen and focus on Brand Marketing for international.
• Policy and Editorial team led by Ninj.
• Central UED led by Larry Tesler.

As we consider a replacement for Cammie leading this team, Allen Olivo will serve as the acting leader and report to me.

While we are sorry to see Cammie go, we have a strong team of marketing and customer experience leaders. I'm confident that moving forward, these teams will continue to produce the strong, award-winning work they're known for.

Thank you for your continued creativity and support.

Sue