Yahoo buys Tumblr for $1.1 billion to get hip
Yahoo expects the Tumblr deal to increase its audience by 50 percent to more than a billion visitors a month. But the most important thing about those new users is, they’re young.
“You know, the cool, the hip," says IDC tech analyst Ramon Llams. "The people who use Tumblr pretty much each and every single day. So it’s tapping into an area that Yahoo has slowly been losing share to.”
But a lot could go wrong. Yahoo has bought other Internet startups, only to let them wither away, like Flickr. Yahoo acknowledged this in the press release announcing the Tumblr deal with a “promise not to screw it up.”
Audio Extra: Tech analyst Greg Stergling shares his thoughts on Yahoo's purchase and whether the company can monetize Tumblr's young user base.
Greg Sterling, tech analyst with Opus Research, says, for one thing, Yahoo shouldn’t immediately blanket Tumblr with banner ads.
“If Yahoo were to show up and start throwing traditional banners in there, you’d have a lot of people objecting and it would not be particularly effective.”
Especially since Tumblr CEO David Karp has resisted advertising.
It remains to be seen whether money can buy hipness, but it can certainly buy brainpower. Since Marissa Mayer took the helm of Yahoo, the company has been acquiring tech and media brains.
A look at Yahoo's recent run on brainpower:
Yahoo purchased Stamped, which was Mayer's first acquisition as CEO, in October of 2012. Stamped is a New York City start-up with a mobile app that allows users to record and share recommendations with friends. All of Stamped's nine employees were reported to join Yahoo.
In December of 2012, Yahoo purchased video chat broadcasting app OnTheAir. The app lets people webcast single or splitscreen interviews. All five members of the start-up joined Yahoo's mobile team.
In January of 2013, Yahoo acquired Snip.It, a Pinterest-like app which lets users clip and display news articles. All but one of Snip.It's 10-person staff were reported to join Yahoo.
Mayer made a move to purchase Propeld, the maker of mobile app Alike, which lets users mark nearby venues as "favorites," in February of 2013. After the acquisition, the Alike team moved over to work at Yahoo.
In March, Yahoo purchased Jybe, a startup food, event, book, and movie recommendations service that hopes to "help connect people with the world around them." Jybe was founded by three ex-Yahoo employees, who will now re-enter the company fold.
Last month, Yahoo acquired news-reading app Summly from its 17-year-old founder Nick D'Aloisio. D'Aloisio is working with the company to incorporate Summly's technology, which translates long-form news stories into shorter summaries, into Yahoo's mobile apps.