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How Will Yahoo's Purchase of Tumblr Affect Advertisers?

  |  May 20, 2013   |  Comments

With a concrete monetization strategy for Tumblr still in the works, digital marketers will likely have a wait ahead of them before they see more advertising opportunities on the platform.

Yahoo's acquisition of Tumblr for $1.1 billion, announced today, will bring together Yahoo's financial resources and backend technology with the reach of one of the Web's fastest growing and hippest blogging platforms.

But with a concrete monetization strategy for Tumblr still in the works—and a need to not alienate Tumblr' youthful, ad-adverse audience—digital marketers will likely have a wait ahead of them before they see more advertising opportunities on the platform.

"As with any platform so loved by its user base, Yahoo and Tumblr must tread cautiously," says Ming Linsley, senior director, social media at media agency MEC.

But she also sees many benefits in the tie-up. Yahoo's backend infrastructure will enhance Tumblr's ability to help advertisers measure the impact of their ad campaigns on the platform, she said, while gaining access to Tumblr's 18-34 year old audience as well a successful mobile app. "There are so many visual opportunities with Tumblr," she says. Tumblr has more than 300 million monthly unique visitors and more than half of them use the mobile app for an average of seven sessions per day.

But Roj Niyogi, co-founder and CEO at Perk, a loyalty web browser company, believes that if Yahoo pushes too hard to sell ads on the platform, users could flee to new competitors such as Svbtle and Medium.

"Yahoo acquiring Tumblr only provides Yahoo the fuel and potential to thrive, but nothing more," he said. "The question is whether or not users will abandon the Tumblr ship because alternatives exist or see true value in Tumblr despite the impending monetization strategy Yahoo/Tumblr has for it."

In a conference call today, Yahoo executives roughly detailed their plans for beefing up the advertising on the site by 2014, which reportedly only saw about $13 million in revenue last year. CEO Marissa Mayer said the company will explore unusual formats, including running ads with the explicit permission of selected bloggers.

Tumblr first introduced native ads in April 2012 and, more recently, introduced sponsored posts into its mobile app.

In a statement announcing the deal, Meyer also said that Tumblr users will be able to use Yahoo's personalization technology and search infrastructure to help discover content, while Tumblr brings 50 billion blog posts to Yahoo's network and search.

Mayer also stressed that Tumblr will remain independent, with David Karp remaining as CEO and that the "product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators."

Perk's Roj says he sees potential if the companies develop in-stream advertising similar to that recently introduced by Yahoo on its homepage, which are embedded into their Twitteresque newsfeed. "Similar strategies implemented on Tumblr could help strike the right balance and not have Tumblr users running to competing services," Roj said.

Greg Kahn, chief business development officer at, MXM, a customer engagement agency, is optimistic that well-crafted native ads on Tumblr will not scare a significant portion of its user base.

"Facebook and Twitter may have had some people drop off the platform since the introduction of native ads, but I think both are still incredibly relevant. Consumers are starting to understand that they need to pay for content in one form or the other, either through advertisements or premium subscriptions," he said.

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ABOUT THE AUTHOR

Mary Lisbeth  D'Amico

Mary Lisbeth D'Amico is a freelance writer based in Jersey City who frequently covers digital marketing, social media, tech startups, and venture capital. She has contributed to a wide range of publications including The Wall Street Journal, Business Week, Red Herring, and Real Deals. Find her on Twitter at @mldamico.

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