Yahoo bought Tumblr for $1.1 billion in an effort to attract younger users. Yahoo CEO Marissa Mayer has promised “not to screw it up.”
New Advertising on Tumblr May Alienate Loyal Users
Tumblr is a popular blogging platform with over 100 million blogs to date. It sees a large volume of traffic: over 300 million unique visitors every month and 60 billion page views per year. It’s also profitable, reporting revenue of $13 million in 2012. But some think Yahoo’s purchase of Tumblr wasn’t a good idea.
Yahoo’s 2012 revenue was approximately $5 billion, much of which comes from advertising. Yahoo plans to increase ads on Tumblr; Mayer promises the ads will be “seamless” and will “enhance” the user experience. Tumblr founder David Karp has resisted using traditional ads, and loyal users might be turned off by a drastic change in ad policy.
Another reason for skepticism is the uniqueness of Tumblr. What’s attractive to users may be unattractive to advertisers. Some of the content is not appropriate for ads, and users don’t have to disclose their real identities, making targeted advertising difficult.
For now the plan is to allow Karp to run Tumblr as before, as a separate company. Mayer stresses that the two companies will maintain their independent identities, in the way that YouTube did when Google purchased it in 2006. Yahoo will not brand itself on Tumblr.
CEO Marissa Mayer Shakes Things Up at Yahoo
The Tumblr purchase was a bold move by Mayer. She was appointed CEO in July of last year and has been making headlines ever since. Mayer ruffled some feathers in February with the announcement that as of July, Yahoo employees would no longer be able to work from home. She also revamped Yahoo’s homepage, YahooMail, and tried to revitalize photo-sharing site Flickr, which Yahoo bought in 2005.
Other purchases include start ups Stamped, shut down soon after – the engineering staff was retained to work on Yahoo projects – and news summary app Summly, purchased for $30 million last month.
But Mayer was brought in to shake things up. Yahoo is one of the best-known internet companies in the world, attracting 700 million visitors every month, but in terms of search engine market share, it lags far behind Google and slightly behind Bing. (Bing has powered Yahoo searches since a 10-year deal was signed in 2009.)
Yahoo also lost ground when it didn’t develop its own mobile devices, as Microsoft and Google via Android, have, and it has never gotten involved in social networking. Bringing in Mayer, who worked at Google as an engineer for over a decade, was a calculated move to reinvigorate the flagging company. Whether she has succeeded will surely be assessed as she celebrates her one year anniversary as CEO in July.
Yahoo is Optimistic About Tumblr Purchase
If all goes well, Yahoo will attract the younger demographic they’re after with the purchase of Tumblr. CFO Ken Goldman is optimistic that Yahoo will see good results from the acquisition as early as 2014
