It's been a long time but I seem to recall Yahoo's approach being decidedly old school. They were trying to create or buy must-read and must-watch content to sell ads against. The marketing message was that at Yahoo.com you will find all the news and entertainment you could ever need!

Google is doing that (particularly with YouTube), as is everyone else. I don't think they break down the search vs. other ad business any more, but at last check it was still the biggest single source of revenue for the company (admittedly, I believe YouTube and adsense collectively generate more revenue for them now, but both of these are primarily showing ads on other people's content).

Ah ok, so her strategy was to pull out on search, but focus on higher quality/yield ads?

It still seems like a bit of a losing strategy as I don’t see any reason for people to stay with Yahoo.

Yahoo at the time was #1 in a number of categories, including fantasy sports, finance, etc. In other areas they were #2 and the marginal value of being #1 vs. #2 wasn't nearly as great as in search. The focus wasn't so much higher quality/yield ads (I mean, that was there, but everyone was always looking for that), but investing in other kinds of online services that would get a better ROI.