Poor agency relationship led to Yahoo COO's exit

Yahoo chief operating officer Henrique de Castro has left the search-engine site, less than a year after being hired by CEO Marrisa Mayer.

His package with Yahoo was for four-years at $62 million and was tasked to rebuild relationships between the company and agencies in order to bring in ad revenue. At the point of his hire, Mayer was said to be under the impression that De Castro had experience in building Google display ads – considering that he was roped in from Google – and got brands to advertise on YouTube.

However, since his hire, sceptics as well as sources that have previously worked with De Castro had doubts of his performance, saying that “he has no experience whatsoever running any kind of real ad sales force, let alone a 1,000+ team selling experiential media into brand buyers.”

In the past year, Yahoo has made clear its intent to dive into online media – positioning itself at the forefront of the online advertising ecosystem. The initiatives were reiterated by Mayer in a separate conference that the company will create a central suite of tools for online advertisers to manage their buys, paired with the cross-channel buys from its massive content collection.

(Read also: Yahoo's big plans to dominate online media)

The announcement to relief De Castro of his role should not come as a shock, since his accumulative sales for the year in his position saw little to no improvement for Yahoo.

At the assumed pace that Yahoo is planning on going, De Castro’s less than outstanding performance would have just slowed the progress of the company.

It has also been reported that De Castro was at odd with Mayer, though no specifics have been divulged.

However, the termination was not personal.

Every brand’s primary concern is ROI (return of investment). The handsome pay check that De Castro was receiving ($39 million) per annum was reported to be higher than his chief executive officer, Mayer.

Since Mayer’s appointment, Yahoo has seen a rise in traffic due to an integrated revamp of its platform. Despite the volume, De Castro’s profit margin fell 7% in the third quarter, giving way for Facebook to take over as the second largest seller of online ads in the US, after Google.

Ad agencies have said that the lack of attraction to place ad spend with Yahoo has more to do with De Castro’s method of sales, or lack thereof.

Perhaps this is an isolated case, but it serves as a reminder for the industry to suss out its hires and appointments. One bad apple may spoil the batch.

In September 2013, Yahoo hired Ned Brody from AOL as its senior vice president. No replacement for De Castro has been announced.