Yahoo is reportedly looking to purchase microblogging platform and social networking website Tumblr for US$1 billion.
Tumblr is considered one of the coolest companies on the Internet because of its appeal to younger users — the very demographic that Yahoo, which recently characterized its users as aging, is now attempting to reach.
For its part, Tumblr, which has raised $125 million in several rounds from various investors, is reportedly under pressure to monetize the site.
“If that did happen, it would be a good fit,” Greg Finn, director of marketing at Cypress North, told the E-Commerce Times. “The highest-grossing, highest use portions of Yahoo are its news and fantasy games and sports, not search, so having the user-generated content that Tumblr brings, and the press and publicity around it and the page views, seems like a logical fit.”
Yahoo CEO Marissa Mayer will host a product event on Monday, but it’s not known whether or not she will address the Tumblr rumors.
Tumblr and Yahoo did not respond to our request to comment for this story.
What Tumblr Brings to the Table
Tumblr claims to host about 108 million blogs and 51 billion posts in 12 languages. It also claims to have 42 percent of domestic traffic in the U.S.
Its content is user-generated, and users post to the site frequently.
“Tumblr has attitude, some very popular areas, and they’ve got content that goes viral, and this is very important these days to have something everybody’s interested in sharing,” Andrew Eisner, director of community and content at Retrevo, told the E-Commerce Times. “That helps build a loyal audience.”
Yahoo’s Possible Contributions
Apart from being willing to fork out up to $1 billion for Tumblr, Yahoo brings more than 700 million users worldwide and expertise in selling ads.
“Yahoo has a huge ad sales group,” Eisner said. “They’ve got traffic, they’ve got an audience, they’ve got an ad sales network, and they’ve got infrastructure. They still also have very strong brands like Yahoo Finance and the sports channel and dating sites.”
Yahoo’s ad sales infrastructure could be a real attraction for Tumblr. Further, Yahoo could provide the management structure even Tumblr’s most fervent backers say the company needs.
Will a Marriage Work?
Tumblr’s users apparently don’t want to accept banner ads, an area where Yahoo is very strong. Also, some industry observers suspect Tumblr has porn and other iffy content that might deter advertisers.
Whether or not Yahoo can get past those issues remains to be seen.
Purchasing Tumblr might not pose too big a problem with a clash of cultures because “Yahoo gets a little transfusion of new blood and that will give them some get up and go,” Retrevo’s Eisner said.
Mayer’s Buying Spree
The Tumbler purchase, if it comes off, will join the 10 purchases Meyer has led since becoming CEO of Yahoo in July.
The company bought Google Ventures-backed iPhone app maker Stamped on Oct 25. On December 4, Yahoo purchased video chat broadcasting app OnTheAir, possibly to compete with Google Hangouts. On January 22, Mayer acquired scrapbooking and aggregation site Snip.it, whose product is similar to Pinterest, for $10 million.
Yahoo on March 25 acquired Summly, a UK company whose app gives 400-character summaries of the news, for $30 million. That deal was apparently a side effect of one Yahoo made with research institute SRI International for knowledge transfer and the acquisition of intellectual property, code and technology.
This month, Mayer bought social productivity platform Astrid, social polling tool developer GoPollGo, MileWise, which makes a search app that lets users factor in airline miles, hotel and credit card points when searching for flights, and Loki Studios, whose flagship product is the Geomon location-aware game.
It’s believed Mayer is seeking to buy technologies that will give Yahoo a foot in the social networking door, where it has no presence.