Has Mayer made a smart move by acquiring Tumblr?

David Karp - Tumblr & Marissa Mayer - Yahoo!

Yahoo Inc. purchases Tumblr, a microblogging service with multitudinous visitor traffic, for 1.1 billion to keep up with the cut-throat competition it faces from social networking sites like Google and Facebook.

A headlong rush to boost the revenue and monetize the eyeballs impelled Yahoo! to opt for this bold move expected to reverse Yahoo’s dip in the cash flow and web traffic.

Tumblr functions as a blog and social network that enables users to post and share audio, videos, and short writing pieces. It targets the youth market, and thus Yahoo! anticipates a dramatic growth in its popularity by attracting users with quality services that will turn it into a hot website.

In an interview on Monday, Yahoo! CEO Marissa Mayer was reported saying that the Tumblr purchase aims to increase the number of page views and interactions on yahoo, a strategy to elevate the traffic on the established website.

Also, it will provide access to the exclusive content of Tumblr, which does not overlap with the content on Yahoo!, thereby presenting different and new information on a wide range of subjects without any plagiarism.

Yahoo’s massive existence on computers has not shifted at the same level as the mobiles. With the acquisition of Tumblr, which has more than 100 million users, Yahoo! plans to breathe life into its essential products like mail, finance, and sports. Since Tumblr has already been killing it in mobile, it will aid Yahoo! in building up neoteric mobile services.

This alliance is also believed to draw benefits to Tumblr. Despite a massive user base, Tumblr’s revenue was only $13 million last year. Hence this deal is reckoned to be a mutual agreement between the American Multinational Internet Corporation (Yahoo!) and the renowned microblogging platform (Tumblr), which will assist in fetching the desired traffic to the former roping in more money to the latter by selling its ads.

However, Tumblr has not been entirely sold to Yahoo! and David Karp, the founder, and CEO of Tumblr, will be running the Tumblr service without any change in the location of the headquarters and his team. Moreover, Tumblr looks at Yahoo! as a promising partner in building up its sprouting advertisement spunk.

On the flip-side, there are risks involved for Yahoo! in this deal as Tumblr has many pages of racially insensitive, pornographic, and sexually-oriented content, which wouldn’t be an attractive option for the advertisers. What is more, there may be a decrease in Tumblr’s demand among certain users due to the extreme pugnacious attempt to bring in advertising revenue.

After purchasing Tumblr, Yahoo! freezes its eyes on Hulu, one of the video streaming services up for grabs. However, the risks involved in the Yahoo!-Tumblr synergy have raised skepticism about accomplishing the desired target.

Let’s hope this endeavor of Mayer helps rejuvenate the position of Yahoo! and leads to a boom in the company’s annual revenue, which has stuck at $5 billion for the past few years.

Will Yahoo’s Tumblr Follow Google’s YouTube Path?

I hope this formula helps restore the popularity of the fading pioneer, making it a hit again among internet users.


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