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Firing of Yahoo executive signals tough revival

SAN FRANCISCO — It looks as if the Google pixie dust isn’t so easy to spread around.

Marissa Mayer’s arrival at Yahoo as chief executive a year and a half ago was widely hailed as an opportunity to infuse the struggling Internet pioneer with the smarts and cachet that had helped her succeed as a top executive at Google. She was one of the earliest employees at Google, with a reputation for inventiveness and attention to detail. If anyone could fix Yahoo, it was believed, it was Mayer.

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But the announcement Wednesday that she had tossed out her top lieutenant, Henrique de Castro, was her first public acknowledgment that turning around Yahoo would be far more difficult than has been sometimes been suggested by the fawning media attention she has received.

“That was Marissa’s first big hire,” said Robert Peck, an analyst at SunTrust Robinson Humphrey. “You can imagine how difficult it would be to admit a mea culpa.”

Bringing on de Castro, who was also a longtime Google executive, was just one of many high-profile moves Mayer has made, including buying the blog site Tumblr for $1.1 billion, hiring the television host Katie Couric to be the anchor to a new online news operation, and starting an online food magazine.

While Mayer took the public spotlight — for example, she personally introduced Yahoo’s new consumer technology site at a trade show in Las Vegas this month — de Castro was charged with the equally vital task of reviving Yahoo’s advertising business. While that would be a herculean task for anyone at a company whose fortunes have been declining for a decade, de Castro was particularly ill-suited for the job, according to ad-industry executives, analysts, and people who worked with him at Google and Yahoo.

When Mayer hired him, the choice mystified people both inside and outside the company. And tension quickly developed between the two leaders, according to the company insiders, most of whom spoke on the condition of anonymity because of continuing business relationships.

“Henrique wasn’t as market-facing as his predecessors or competitors,” said Amanda Richman, president of investment and activation at Starcom USA, which buys billions of dollars of ads a year on behalf of big consumer brands like Kraft and Kellogg.

De Castro did not respond to phone and e-mail messages.

Mayer declined a request for an interview. Sarah Meron, a Yahoo spokeswoman, said, “We’ve always been clear that this was going to be a multiyear process, but we’re gaining momentum and putting out new ad products and services regularly.”

The splashy home-page banner ads that Yahoo rode to riches in the early days of the Web are fading away in favor of Google’s search ads, Facebook’s targeted social ads, and automated systems that reach consumers on smaller sites that charge a relative pittance. In mobile advertising, the hottest area of growth, Yahoo has virtually no presence.

In recent months, Yahoo has begun a series of initiatives to increase traffic to its sites, including new mobile apps, an overhaul of its Flickr photo service, expanded video news offerings, and a consumer tech site anchored by David Pogue, a former columnist for The New York Times.

“With content, there’s eyeballs, and with eyeballs, there’s advertising,” Peck said.

Peck praised Mayer for having the courage to cut her losses on de Castro, even though his departure will cost the company tens of millions of dollars in severance and promised stock compensation that he was promised. “It’s a testament to her,” he said. “She made a public acknowledgment of an expensive mistake.”

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