What is Tumblr?
Shortest answer: A micro-blogging site popular among teens and young adults.
The platform has small revenue and high engagement. It is a very popular service but efforts to make money from it could collapse the whole thing.
Why did Yahoo buy Tumblr?
Shortest answer: Old school service wants to attract hip Millennials and jump start growth.
Yahoo lost its dominance in the search market early on in the 2000s and has since, failed to capitalize on two earlier acquisitions – Flickr (photo/video hosting site) and del.icio.us (social bookmarking/content sharing site).
Tumblr’s 108 million bloggers will allow Yahoo to segue into social media, to access mobile traffic and jump start growth (Tumblr sharing has increased by 1299% since 2011) and eventually, profits.
Tumblr is not only popular among Millennials but it’s viewed as a credible source among its users – two things Yahoo is struggling with.
What does Yahoo plan to do with Tumblr?
Shortest answer: Keep branding between the platforms separate; advertise on Tumblr.
First and foremost, Yahoo plans to keep the Tumblr branding separate which was a big concern for the community.
Second, while Tumblr recently started streaming ads on its mobile app (with plans to do the same on its website), Yahoo wants to experiment with more advertising on the website (either on the homepage feed or with popular bloggers who give permission).
Yahoo hopes the advertising opportunities and community access to push them back into Internet relevancy.
How does Tumblr benefit from the acquisition?
Shortest answer: They get the resources to expand ad packages and sales a lot quicker.
Aside from the founder making bank in the acquisition ($1.1 billion), it would give them the opportunity to expand their sales and utilize resources a lot quicker. This is something they’ve struggled with in the past.
What are the Tumblr community’s concerns?
Shortest answer: Tumblr will lose its credibility amongst users.
A big part of Tumblr’s appeal is the simple design, which isn’t cluttered with ads.
Yahoo and Tumblr are two very different companies with two very different audiences, many worry they’ll have trouble finding synergy.
What can Yahoo do to be successful with Tumblr acquisition?
Shortest answer: Selective advertising that stays true to the nature of Tumblr content.
Yahoo will need to be selective with advertising and find what content will work with which ads and let the rest go in order to stay true to what Tumblr is.
Tumblr is image-oriented and creative, Yahoo is corporate. They will also need to consider different advertising concepts that are popular on Tumblr (like GIFs).
Why is this important?
Shortest answer: If done right, this can make Yahoo an Internet powerhouse again.
Since it dipped in popularity in the early 2000s, Yahoo has been trying to turn around and compete with Google and Facebook’s continued growth. If the company can successfully monetize Tumblr’s community (without alienating them) they could become an Internet powerhouse again.