Yahoo Inc. said Sunday that its chief domestic sales officer resigned and that the company will merge its search and display advertising departments in the U.S. as the internet powerhouse fights to catch up with online search leader Google Inc.

Yahoo said it hopes the latest shakeup will streamline the way it sells advertising to customers who increasingly want to buy ads across a variety of formats, from being linked to search terms to popping up as a graphical display to being shown as video.

The reshuffling follows a major executive overhaul announced last week, with co-founder Jerry Yang replacing Terry Semel as chief executive. In the latest organizational change, Yahoo said Wenda Millard, chief sales officer in the U.S., is leaving the company effective immediately.

While praising Millard's contributions over her past six years with the company, Sunnyvale, Calif.,-based Yahoo said that the industry had changed and that the company needed a manager with different skills to push the company forward.

In an interview with the Associated Press, Millard, who immediately announced that she has taken the newly created position of president of media for Martha Stewart Living Omnimedia Inc. in New York, said she bore no ill will toward Yahoo.

"It was a great six years, I had a wonderful time, but I wanted to do something a little bit broader," she said. "It's not really a comment on Yahoo. It's really a comment on where I wanted to go next, and this was just a great fit."

Millard, who has been a member of Martha Stewart Living Omnimedia's board for the past three years, will oversee the company's publishing, internet and broadcasting activities.

Susan Lyne, president and CEO of Martha Stewart Living Omnimedia, said she began wooing Millard in January.

"It's been clear to us for a while that to really maximize the potential of our media businesses, we needed to consolidate publishing, internet and broadcasting under a strong strategic head," Lyne said. "I pushed to get her here sooner, but she felt a commitment to her Yahoo team and wanted to make sure they were well-positioned going forward."

David Karnstedt, who previously served as senior vice-president of Yahoo's search sales business, was tapped to lead the newly combined sales teams as head of North American sales.

"By taking a more holistic approach to advertising sales, Yahoo will become a more consultative seller, which should make buying complete solutions easier for our customers across Yahoo and our partner network," Karnstedt said in a statement.

"These moves will also enable our world class sales team to more effectively meet the needs of our advertisers — not just today but well into the future."

Yahoo has been looking for ways to gain ground on Google in the lucrative online advertising market, where Yahoo ranks a distant second despite once being the larger of the two companies.

One major hope for Yahoo is the upgraded advertising system it introduced in February. However, the payoff from that system isn't expected to start materializing until later this year.