“When Yahoo forked out $1 billion for Tumblr in the middle of 2013, many wondered whether the tech giant had got the wooden spoon in the race to acquire the rising social networks,” writes Felim McGrath in a recent post at GlobalWebIndex. “The year before, Facebook picked up Instagram, while Twitter got hold of Vine – two platforms that have enjoyed rapid growth and created considerable buzz. Meanwhile, GlobalWebIndex’s research shows that Tumblr is used by less than a tenth of internet users.”
But not to worry, posits McGrath. Yahoo knows what it is doing.
“Yahoo has a pretty good recent track record in terms of investments; its stake in Alibaba brought it a huge cash return when the e-commerce giant was floated earlier in 2014, and rumour has it that it’s close to securing a deal with the famously hard-to-woo Snapchat – an app which remains incredibly popular among the much-coveted teen demographic,” explains McGrath. “So, with Yahoo now stating that Tumblr will top $100 million in revenue in 2015, the question beckons: is there real money in the blogging platform?”
And things are happening at the site — for instance, the recent launch of “Tumblr Sponsored Apps.” In a move to monetize, the gaming-directed ads – leading users to Google Play and the App Store – are sponsored posts now available only to Tumblr’s mobile users.
“Nevertheless, the platform’s re-blogging system will allow the ads to spread to other devices and, considering Tumblr claims that 94 percent of posts on its platform are re-blogs, this creates a real atmosphere for viral ads,” argues McGrath.
The bottom line? McGrath drops that on consumers.
“Obviously, it’s all about the users – and here Tumblr has some distinct advantages,” he argues. “Firstly, Tumblr may be small but it’s growing – and very quickly. The number of active users on the platform increased by 120 percent over 2014, allowing it to overtake Facebook-owned Instagram as the fastest growing social network of the year. (Incidentally, Snapchat is currently the fastest rising messaging app: spot the Yahoo-based pattern here?).”
McGrath thinks Tumblr’s demographics are “the stuff of marketers’ dreams.”
“Of the 35+ social platforms tracked by GlobalWebIndex, Tumblr has the youngest audience of all; more than 70 percent of its users are 16-34, with 4 in 10 being under 24,” McGrath explains. “Compare this to a network like Facebook – where a quarter of active users are over 45 – and the differences are clear to see.”
In a word, it’s too soon to discount the potential future impact of Tumblr.
“Tumblr has the right user base, the right rate of growth and the right forms of user engagement to make its sponsored apps work,” concludes McGrath. “It’s changing from the little platform that could to the not-so-little platform than can – something which makes Yahoo’s $1 billion look like a pretty sound investment.”
