Yahoo and Tumblr

Posted: May 23rd, 2013 | Author: | Filed under: Uncategorized | No Comments »

Here’s my wild speculation – Tumblr will not be a new cash cow for Yahoo within the next five years and David Karp will not enjoy working under his new overlords My original thoughts have changed, after writing this post out and researching the gaps, I’m now bullish on this acquisition and starting to drink the Marissa Kool-aid.

Tumblr is popular as fuck, no doubt about that. They have over 20 billion page views a month and have continued to grow.

Will this growth continue and can it be monetized effectively?

Growth is anyones guess but the numbers are promising.

Eyeballs are eyeballs and despite what some want to believe you can always make money if you have enough eyeballs. Rumor has it that Tumblr made $13 million in 2012 which seems small considering it’s $1.1 billion exit. In the world of the web, revenue isn’t everything and Tumblr is an example of a product-first company that has delayed gratification ($$$) for the sake of the product quality – not because of a lack of opportunity to do so.

What would Tumblr need to do in order to make this acquisition a success? To justify the $1.1 billion price Tumblr will need make a lot of money someday, better sooner than later.

Synergy

Yahoo makes the majority of it’s money in advertising – search, display, video and mobile. Yahoo has experience monetizing eyeballs and relationships with advertisers to quickly and effectively monetize Tumblr. How valuable are the views on Tumblr? This is yet to be seen. The intent of a user, unlike Google and Yahoo searches, are low and the information about a user, like you have on Facebook, is minimal. A pageview on Tumblr can make money but is most likely not as valuable as one on Google or Facebook but similar in value to the pageviews that many other Yahoo properties receive. With the experience that Marissa has making money off of eyeballs and the eyeballs that Tumblr has this may just work. I doubt in any jaw dropping way, but it may be worth the $1.1 billion price tag.



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