Armstrong Exodus Fallout

Now that Google Senior Vice President Tim Armstrong has bailed on Google to run Time Warner's anemic AOL, the Wall Street Journal wonders if anyone can replace his unique schmoozing skills as the company tackles the challenge of expanding its advertising base beyond search. While the company's bread and butter has long been small- and mid-sized advertisers that toss moderate cash at a few lines of search ads, Google has struggled to lure big-name companies to spend serious money on video and display ads. YouTube, of course, has very publicly struggled with the problem, as large companies are reluctant to spend cash to place ads next to homemade videos of kids fighting in the football field after school. But if anyone could do it, the Journal's Jessica Vascellaro and Emily Steel report, it was Armstrong, who brought a distinctive attentiveness and generosity to the company's sales department.

"Mr. Armstrong was known for frequently seeking feedback from customers, and he built strong ties within the media and marketing worlds," write Vascellaro and Steel. "Last January, he moderated a fireside chat with Jeff Zucker, president and chief executive of NBC Universal, at a Google TV Ads Summit at the company's Manhattan offices attended by dozens of marketing and media professionals."

Personal relationships are very important in sales, and Armstrong is credited with bringing a key instinct for customer relations to Google's tech-heavy corporate culture. Although Armstrong groomed a small army of talented subordinates who will keep his approach intact at Google, the Journal argues that the company will sorely miss Armstrong's personal approach.

Armstrong's departure comes at a particularly inopportune moment for Google, as the recession has left many advertisers too spooked to take a chance on new, untested advertising modes such as video and graphical ads—the very area Google is seeking to develop. On the other hand, we were intrigued to read that Jeffries and Co. analyst Youssef Squali predicted that YouTube will generate "only" $500 million in net revenue for 2009. This time last year, most analysts were talking about $100 million in annual revenue for the video unit; a fivefold jump in 12 months doesn't sound like hard times to us.

So who will replace Armstrong? The Journal's money is on Sukhinder Singh Cassidy, Google's president for Asia-Pacific and Latin America operations. Cassidy is closely integrated into Google's sales department, and the transition, at least, would be relatively seamless. Over at Silicon Alley Insider, Nicholas Carlson argues that contrary to the Journal's thesis, Google is actually planning to cut back on aggressively expanding into video and graphic ads, focusing instead on weeding out the unprofitable ventures and riding out the hard times. "We hear sentiment inside of Google is that it's heading into a period of slower growth and that Tim's replacement doesn't need to be quite the 'charismatic evangelist.' " Carlson writes.

Meanwhile, another slice of talent may be about to get off the S.S. Google. Valleywag's Owen Thomas passes on the rumor that Doug Bowman, "Google's top designer," has just taken a job with Twitter, every Congress member's favorite way to ignore a Barack Obama speech.