Rayan Karaky is chief digital officer at SMG MENA
“Before the ink had dried on Yahoo!’s acquisition of Tumblr, some users were already calling Tumblr CEO David Karp a sell-out. Others went as far as pronouncing Tumblr dead.
Yahoo! doesn’t have the best track record, but at face value the deal makes perfect sense for both parties – a struggling giant like Yahoo! trying to find its place amongst the likes of Google, Facebook and Apple via the acquisition of a platform that has almost 200 million unique users, mostly from a young / teen demographic, as opposed to Yahoo!’s older generation. With $4 billion in cash Yahoo! could afford to take bets on social platforms, and Tumblr was probably the only one it could still afford. But this affordability comes at a huge price. After six years in operation, Tumblr only made $13 million in ad revenue and, with more than 50 per cent of its user base using mobile access, building a commercial model that works will be a huge challenge.
So getting $1.1 billion is pretty much a bailout for Karp and his investors. The question remains as to how Yahoo! will benefit from this acquisition when a large chunk of Tumblr’s blogs contain offensive or explicit content that advertisers will avoid. It will be interesting to see if Yahoo! follows Google’s suit and builds a revenue share model with content owners (bloggers in this case), as flooding Tumblr with ads would most likely lead to its demise.
The true power of Tumblr is mobility and data. When you think Yahoo! you don’t think mobile first and Yahoo!’s president and CEO, Marissa Mayer, is trying to change that, starting with Flickr’s new app. Tumblr should help Yahoo! make great strides in mobility. As for data, Yahoo! can now leverage millions of user profiles (seven million in our region) to build better content that younger audiences can engage with or build new advertising propositions that have a larger potential for sharability.”
Marissa Mayer’s own words: “promise we won’t screw it up”, David Korp signed his announcement with “F*** Yeah, David”, will leave it to you to determine if that contrast sparks optimism or just raises a lot more questions.
