Hilary Mason is brilliant. But Yahoo knows what they're doing when it comes to their advertising. YahooMail is one of the most valuable properties on the web in terms of CPM. Their ad display makes for a crappy UI experience, but it also makes them a lot of money.
I'm amazed that you can look at the wreck Yahoo has become by blind optimization and say they know what they're doing.
In the particular case of Yahoo Mail, their crappiness has driven off large numbers of high-end users. They also lost a lot of great staff who were tired of working on crappy things for managers who didn't give a shit about the users or the workers as long as the numbers were good and their political power increased.
Yahoo's a classic example of what happens when you know the price of everything and the value of nothing.
As someone already pointed out, these types of CPM offer NO value to the customer. Does it help Yahoo in the short term? Probably. Long term? Probably not.
