Yahoo Buys Tumblr For $1.1 Billion, Promises “Not To Screw It Up”

On a conference call to discuss Yahoo’s exceptional $1.1 billion acquisition of Tumblr, Yahoo CEO, Marissa Mayer’s admiration for Tumblr’s achievements and culture was refreshingly transparent. Tumblr will continue to operate independently, David Karp will remain CEO, and Yahoo has promised “not to screw it up.”

Tumblr has more than 300 million monthly users and is signing up 120,000 new users per day. The deal is expected to increase Yahoo’s total audience by 50% to more than a billion monthly users. Traffic could grow by 20%.

In the press release, David Karp, CEO of Tumblr, addressed the Tumblr community thusly,

“Our team isn’t changing. Our roadmap isn’t changing. And our mission – to empower creators to make their best work and get it in front of the audience they deserve – certainly isn’t changing. But we’re elated to have the support of Yahoo! and their team who share our dream to make the Internet the ultimate creative canvas. Tumblr gets better faster with more resources to draw from.”

Marissa Mayer wrote, “On many levels, Tumblr and Yahoo! couldn’t be more different, but, at the same time, they couldn’t be more complementary. Yahoo is the Internet’s original media network. Tumblr is the Internet’s fastest-growing media frenzy. Both companies are homes for brands – established and emerging. And, fundamentally, Tumblr and Yahoo! are both all about users, design, and finding surprise and inspiration amidst the everyday.”

The big gain for Yahoo is on mobile. More than half of Tumblr’s users engage with the mobile app an average of seven sessions per day. Mayer spoke of Yahoo’s work to catch up on mobile and acknowledged the company has a ways to go. The Tumblr acquisition helps them nab a huge, engaged mobile audience immediately.

With more than 105 million blogs and 50 billion blog posts, Yahoo sees a compelling search story from Tumblr and a need for Web search on Tumblr. Expect to see Tumblr posts pulled into Yahoo’s newsfeed in a targeted way, much like the recent announcement to incorporate relevant and personalized tweets into the homepage newsfeed. Yahoo acknowledges that the user base for Tumblr may never migrate to Yahoo, but the company hopes to increase engagement by integrating Tumblr content onto Yahoo properties.

There are no set plans yet, but the company will also be looking at ways Flickr can help Tumblr users in their visual storytelling.

The official Yahoo blog is moving to Tumblr.

Monetization & Elevating The Ad Experience

Tumblr introduced minimal native ad units on mobile earlier this year, but otherwise has not monetized the service. That will change, but Mayer stresses in a way that will follow the form and function of the platform and monetize “in a way that’s meaningful” for users and fit user expectations, with a light ad load.

Mayer spoke of her and Karp’s mutual love of pop culture and their desire to elevate online ad content to the level of aspiration that some TV ads and movie trailers can evoke in viewers. “We want the ads to be as great as the content,” she stated

Ads could be served through both premium placements and ad networks, and Tumblr may work with bloggers who want ads on their blogs. The Tumblr team has acknowledged they are now ready to monetize, and marketers have been eager to participate on Tumblr because they see the huge volume of users and interesting demographics.

The challenge will be to facilitating creative, rich experience ads that Tumblr’s young audience will embrace rather than eschew.

The deal is expected to close in the second half of this year.