Tumblr founder David Karp has now confirmed what we've all known for a couple of days, that he's sold his blogging site Tumblr for $1.1bn. Here's some reactions for some digital and social professionals as to what the deal could mean for both companies and their advertisers.
Craig Le Grice, global technology performance director at Aegis Media
Lastly, the big 'content' battle for the 'relatively wholesome' Yahoo will be integrating a platform that is as much used for porn and adult content as it is cat GIFs.
Robin Grant, global managing director of We Are Social
Jeroen Matser, VP of strategy at Blast Radius
Could this be the equivalent of what Instagram was to FB? Same value (around 1BN) so definitely a big bet. The acquisition of Instagram led to a surge in mobile revenue for FB, what is Melissa Mayer hoping to achieve with this? Tumblr is big in mobile and with an impressive number of monthly users, Mayer will be able to start reporting increased mobile revenue figures. Tumblr has relatively the same Mobile adoption rate as FB which is a lot higher than Yahoo currently.
Another reason could be to start building a younger audience. Current primary revenue streams are through Search and Advertising but those have shown flattening or even declining trends. Adding this new and younger audience could be the start of a re-focus of strategy. The question is how the Tumblr community will respond. Yahoo doesn’t have a flawless past when it comes to acquiring community platforms (delicious and Flickr come to mind. Delicious got binned, Flickr still exists but never really made it into the core business).
Yet another interesting point is that according to current levels of valuation amongst tech investors, the 1BN price tag is somewhat low considering a valuation of 800 million dollars in Sept 11. So why would Tumblr sell now and sell to Yahoo? Maybe Mayer and Tumblr founder Karp simply have found each other and see mutual benefits in the deal. She can start transforming Yahoo and he gets a boost in capital available to expand server power and opportunity to grow the company under management of Mayer who clearly seems a woman with a plan.
Andrew Yates, CEO and co-founder of Artesian Solutions
Tumblr provides Yahoo! with a captive audience that it can engage with using its existing advertising model to break into both the social and mobile domain. Tumblr has already developed a successful business model that leverages its audience, global reach and technology - it has 184 million unique users and 12.1 billion page views. In addition, at a time when many social platforms are struggling to monetise mobile channels, users of Tumblr’s mobile advertising product have quadrupled over the last year. However, it remains to be seen whether Yahoo! will capitalise on Tumblr's user growth to deliver a return on investment. As the commercial value of social channels continues to rise, we will see more large vendors look to defend their dominance in the competitor landscape by acquiring young social start-ups.
Rupert Staines, European MD of RadiumOne
Rick Williams, chief technology officer for Isobar
However, it will be very interesting to see whether Melissa Mayer’s $1.1 billion gamble pays off. It’s clear there is a race on amongst Twitter, Facebook and Google to successfully bring display advertising into the stream without losing users. By purchasing Tumblr, Yahoo! has ensured it remains in the game. Let’s hope for their sake that they uphold their promise to ‘not screw it up’ and use the opportunity to do something that genuinely reinvigorates the industry.
Jamie Kenny, chief strategy officer at Jam
That’s the tricky question facing Marissa Mayer, CEO of Yahoo and her new direct report, David Karp, founder of Tumblr.
On paper the potential deal looks attractive for both parties. It gives Yahoo access to a new younger, more mobile-focused audience of about 300 million users that Yahoo historically has struggled to attract and monetise via search and display ads.
It gives Tumblr shareholders and investors a shed load of cash. Tumblr gets to keep its relative independence, with the Tumblr brand and HQ being kept separate from the Yahoo, whilst benefiting from Yahoo’s resources.
The deal could be good for brands and advertisers. Yahoo could leverage its experienced sales force and knowledge of advertising tracking and accountability – something which is hasn’t been a focus for Tumblr to date.
But the challenge is that Tumblr is a series of diverse creative communities – who love curation (nearly 90% of the content on the site is re-blogged) but may not be particularly receptive to the search, display or native ads at a high frequency.
Back in March at SXSW, David Karp spoke about how he envisaged monetising Tumblr. He talked about how adverting may play a part but he was also interested in helping Tumblr users generate revenue from their own creativity – in a similar way to Kickstarter or Indiegogo.
This may or may not be the answer, but should this deal go through, one suspects the pressure will be on for Karp and his team to come up with solid answers pretty quickly.