MEC's Take On Yahoo Acquisition Of Tumblr- A Play for Social Media Credibility & Increased Relevance

Image credits: The Daily Dot

Following in Facebook’s footsteps after the $1 billion acquisition of Instagram last September, Yahoo has agreed to buy Tumblr, a popular social blogging network, for $1.1 billion.  The all-cash deal, funded by Yahoo’s sale of half its stake in Chinese Internet giant Alibaba Group, is aimed to help Yahoo regain relevance with young, tech-savvy users, as well as incorporate a viable social platform into the Yahoo collection of properties.

Tumblr: Loyal User-Base, But Limited Monetization  
Founded in 2007, by 26-year-old David Karp, Tumblr is a social blog network with over 108MM blogs and 117 million unique users world-wide (comScore).  Per Quantcast, Tumblr is the 24 site on the Internet. However, Tumblr has yet to demonstrate a sustainable monetization model.  Tumblr only began offering paid advertising last May, and has favored Twitter-style native advertising vs. standard display banner ads.  Moreover, Tumblr is a creator’s community, in which the founder and the users have been historically averse to advertising.  Karp went as far to say publicly, ““we’re pretty opposed to advertising. It really turns our stomachs.”

Read on for the implications for marketers. 

Implications for marketers
A number of advertisers, from IBM to Warby Parker, have tested Tumblr’s Spotlight and Radar 
ads, which highlight native content on the platform.  However, most advertisers have yet to invest with Tumblr at meaningful levels. Yahoo’s more robust infrastructure, sales force and experience may provide the monetization scale that Tumblr has previously lacked.   That being said, it would behoove advertisers to observe the response of Tumblr’s loyal users to the acquisition when determining investment levels with this partner.   Yahoo’s management of the blog network will  quickly  determine whether Tumblr can retain its coveted 18-34 user base, which made the start-up so attractive in the first place. As a canvas for co-creation and creativity, Tumblr provides a ripe opportunity for brands to connect with users in a meaningful way.  We look forward to working with our partners to identify the right way to engage on Tumblr within the context of the Yahoo ecosystem.

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