Earlier this week, Yahoo announced that it was going to buy Tumblr for a cool $1.1 billion. But what does the deal mean, and what will the future look like for this corporate relationship?
What’s the background?
Firstly, let’s clarify what Tumblr is – it’s a micro-blogging site where users can share videos, gifs, images and tag them to enable users to find other similar content. Tumblr covers a wide range of subjects (yes, around 11% of the site’s top domains have adult content), but its 300m unique monthly user audience is very young – almost 40% of its users are under the age of 24. And it’s very popular.
In contrast, Yahoo has an older audience on its sites (39% are over 45 years old) and desperately needs to inject some youth into its audience to secure a stake in the digital future. And the size and loyalty of the audience is very attractive from a revenue generation perspective.
What’s the problem?
Tumblr users are very concerned about what the take-over of their site will mean. This has seen a significant number of users (160k) signing a petition against the move, and 72k users moving to WordPress within one hour last Sunday. In response, Yahoo has said that any advertising will be ‘seamless and will enhance the user experience’. I would not be surprised to see ads at the start of videos (as per YouTube) and subtle relevant on-page advertising.
The clash of cultures could also be a factor – just looking at the press releases from Tumblr and Yahoo show the difference. Yahoo released a standard corporate one, and Tumblr released one announcing the take-over with the very non-corporate ‘F*** yeah!’…..!
What’s the future?
From Tumblr’s perspective, they are keeping their CEO David Karp, who has been the driving force behind the firm. And with increased investment, will he be able to deliver even greater user engagement?
The clash of cultures will be interesting to observe. I have seen corporate brands take over ‘cool’ brands, and when things are going well and targets are being met, the corporate tends to be happy to keep things as they are. But it’s when advertising revenues are struggling when we will see how committed Yahoo is to maintaining Tumblr’s culture.
Like 2012’s Facebook IPO, and the rumoured Twitter IPO, this deal brings into question monetisation of social media. I think that it is inevitable if we want to keep our social networks free to use. Someone has to foot the bill, and it’s likely to be an advertiser and a small piece of the user experience.