On May 19, 2013, founder David Karp signed a $1.1 billion deal selling the interactive social media website Tumblr to Yahoo!. The deal surpassed Facebook’s $1 billion purchase of Instagram and is the largest investment made by Yahoo! this year.
The 24th most viewed website on the internet, with 300 million monthly visitors and 105 million active bloggers, Tumblr is a popular online platform, especially with the 18-24 age groups. Despite its active, loyal following, Tumblr has been struggling to gain revenue, having burned through $25 million in cash last year. Karp had made deals with Facebook, Microsoft and Google that yielded no results, until the Yahoo! deal struck.
The purpose of the acquisition is not to pursue new users, but to refresh Yahoo!, apply Yahoo!’s resources and optimization techniques to Tumblr, and “monetize eyeballs” by aiding Tumblr in getting returns from its users. CEO Marissa Mayer declared that Tumblr would continue to experiment with ad integration. Tumblr has already introduced sponsored posts into its mobile application version, to mixed reception. Karp had so far eschewed sponsored ads, claiming Tumblr’s ad principle to be based on Twitter’s “Tweet is the ad”, embedding ads into the personal information stream and putting the user experience first.
While analyst Brian Blau added that Yahoo! can help “to propel, help scale infrastructure, design, everything that Tumblr doesn’t have because it’s a small company,” content marketing agency Edge’s head of strategy Richard Parker stated Yahoo! is relying on exploiting Tumblr’s existing audience rather than developing its own, explaining that advertising to people is “not about paid media” but “creating content”.
It is unclear whether the Tumblr team would leave and join Yahoo!, but on June 1, 2013, Tumblr’s creative chief Jacob Bijani announced his resignation via a blog post, after the confirmation that Tumblr would start having sponsored posts on its desktop version site.
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