Yahoo’s board has approved a $1.1 billion all-cash deal to buy Tumblr, a New York City-based technology company.
Yahoo CEO Marissa Mayer tweeted that this is the first acquisition announced by an animated GIF and promised “not to screw it up,” keeping the team in place and offering support and integration, not re-invention. Yahoo famously acquired delicious, Flickr and Upworthy, amongst other hot online properties, only to let them moulder. Many users still haven’t forgiven Yahoo for its 2009 decision to close Geocities, an popular online community from the 1990s, without archiving it.
Tumblr CEO David Karp tumbled the news and sought to allay user concerns: “We’re not turning purple,” he wrote. “Our headquarters isn’t moving. 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.”
$1.1 billion dollars is a lot of money for a (re)blogging network with tens of millions of users but scant revenue but it buys Yahoo a foothold in mobile social networking and, at least for the moment, many more young users — as long as the community doesn’t flee.
That’s likely one reason that both CEOs took such lengths to be reassuring this morning. Mayer joined Tumblr and has been posting cheeky animated GIFs that allude to seamier side of the social blogging service.
In the months ahead, Tumblr users will see more ads — “native ads” and dashboard ads from Yahoo’s ad network and perhaps in-line ads on the mobile app — much as Facebook users do. That’s no surprise, although finding the right mix of relevancy, frequency and intrusiveness for mobile advertising will be a delicate dance.
Mayer says that the two companies will work together to create “advertising opportunities that are seamless and enhance user experience.”
It will be interested to see if that means more sponsored posts and advertorial from “brand journalists” and corporate media writing for business tumblrs. John Battelle’s looks at on displays, streams and native advertising concludes that this move gives Yahoo “an asset that its branded display sales force can sell as sexy: native, content-driven advertising at scale.”
In an attention economy, ads need to be independently entertaining on their own to avoid the click away or being tuned out by the glazed, jaded eyes of young people exposed to an unprecedented bath of media before adulthood.
That’s a dynamic that WordPress founder Matt Mullenwag alluded to in a comment on his post on “Yahooblr“:
In an advertising business a lot of it comes down to attention: how much and where advertisers spend to get your attention usually lags 3-5 years from where people are actually spending their time, and when that gap closes it can be very impressive. Of course it doesn’t happen for free, there are lots of organizational changes needed to execute on that opportunity, and probably as many people screw it up as get it right.
I believe there is also an even-larger-than-advertising opportunity around subscriptions and products. The big shift from older forms of media is that people aren’t just passively consuming as they might in front of a TV, they’re creating. It’s a hobby and a passion, not a vice. In that context I think subscriptions are more aligned with users than advertising, and that’s the direction Automattic is pointed in.
The big question most technology pundits and business analysts will be asking today is whether this makes sense for Yahoo and puts them on a stronger course. The initial market reaction put Yahoo stock up nearly 1% at 11 AM.
On a personal note, I expect to keep tumbling, though I find WordPress to be a superior blogging platform. That said, my attention is spread across many different social platforms and media organizations, not to mention my inbox and iPhone.
If I’m confronted by too many ads on the Tumblr mobile app, I’m going to spend less time consuming and creating there. I’m sure I’m not alone.