Yahoo to buy Tumblr for $1.1 billion
Nevertheless, the caution displayed in both blog posts is as a direct result of real fears amongst Tumblr users, based on Yahoo’s history of unsuccessful platform purchases, from Geocities and Flickr to Delicious and Konfabulator, amongst others. Moreover, Mayer has confirmed that Yahoo is planning to run more ads on the platform. On monetisation, she stated:
On Tumblr, there’s a number of different places where we think we can monetize in a way that is meaningful and really addititive to the user experience.
For example, Tumblr has what’s called the “dashboard”, which is their version of the newsfeed — or in old school terms, an “inbox” for the blogs you follow. So basically different bloggers that you follow can all appear there in your feed.
And today, Tumblr already does some advertising, though minimal, in that feed. We would like to look at them and understand how we could introduce ads — in a very light ad load — where the impact is really created, because the ads really fit the users’ expectations and follow the form and function of the dashboard.
We also see some opportunities to possibly work with bloggers who want ads, to provide ads on their Websites. That would always be done with the blogger’s permission.
All in all, the deal presents both a great risk and an exciting opportunity. The $1.1 billion amounts to roughly 1/5 of the $5.4 billion that Yahoo still own in cash from sale of stocks in Alibaba Holdings Group, a Chinese internet company. Nevertheless, as Tumblr’s figures above show, this money could prove to be well spent, especially if it manages to push Yahoo’s share price up to $33, the figure for which co-founder Jerry Yang refused to sell the company to Microsoft five years ago.
To sum up, when talking to The Drum about the issue, We Are Social’s Robin Grant said:
With Yahoo’s entire ad sales team now likely to be selling Tumblr ads, Mayer will need to walk a tightrope between the clear need to monetise and, on the other side, upsetting Tumblr’s users by showing them too many ads, especially bad ones. Mayer will also need to give Karp the freedom to grow and inovate the Tumblr platform, something they seemed unable to do in the past with their Flickr acquisition.
Update: Watch We Are Social’s Marketing Director, Tom Ollerton, on the UK’s Channel 4 News commenting on the takeover (at 1m 34s):