It's the billion dollar question - can you pay someone to make you look cool? Yahoo seems to think so. On 20 May the tech giant confirmed it will pay $1.1 billion (£730 million) in cash to acquire the microblogging and social networking site Tumblr. It's Yahoo's biggest acquisition since CEO Marissa Mayer was poached from Google last July, and many have seen it as a big gamble by one of the tech world's most powerful and influential women (not to mention one of the most controversial).
Keep Calm and Carry On
On Monday, Mayer took to her own personal Tumblr account, announcing the acquisition with a sporadically flashing GIF. It was a valiant effort but Mayer's attempt at cool felt very much like a message from your mum that ends with a "LOL" that she thinks stands for "Lots of Love".
The acquisition will give Yahoo access to over 100 million blogs, most of whom are run by people between the ages of 18 and 24. This sudden influx of young, social and creative web users is certainly one way to boost Yahoo's cool, as well as its revenue. Mayer anticipates that as a result of the acquisition, Yahoo's audience could grow by 50 per cent to more than a billion monthly users and could grow traffic by 20 per cent. The site sees 900 posts a second, and there's a lot that can be said for the popularity of Tumblr and the kudos it has among the young micro-blogging community.
Christophe Mallet, Head of Strategy at social media consultancy Carve Consulting points out the unique potential Tumblr offers Yahoo's advertisers. The anonymity of Tumblr might seem unappealing for advertisers, who commonly rely on real identification information about bloggers (such as age, name and gender). But Christophe remarks: "What you have on Tumblr is tags, so it shows a lot about your interests." And this is potentially more powerful than real identification information, but Christophe believes that right now, Tumblr's way of working is outside the traditional mindset of advertisers who target via demographic rather than taste.
David Karp, CEO of Tumblr, who founded the microblogging platform in his mum's apartment in New York back in 2007, has shied away from making any kind of decent money out of his site. Tumblr reportedly made only $13 million in revenue last year. As a result, Tumblr advertising is weak in terms of targeting, and analytics for the site are almost non-existent. Christophe says: "one of the biggest benefits of this acquisition is that Yahoo are going to bring in expertise about search personalisation, targeting and analytics." This could be good news for Tumblr users, making it easier for people to find and share their work.
Yahoo's larger budget and fresh perspective could also help improve the user experience of the site. Many Tumblr bloggers have called on Yahoo to fix the numerous technical bugs in the site. "If [Yahoo] can build better products [for Tumblr]," says Christophe, "it will bring better engagement from their users and better engagement means better advertising revenue." So perhaps Yahoo is on to something.
Now Panic and Freak Out
One of the most memorable things about Mayer's announcement of the acquisition was her promise not to "screw it up." Yahoo's recent string of acquisitions have all been flops (Del.icio.us, Flickr, Geocities). Christophe remarks: "Yahoo has a miserable reputation of destroying good companies by doing nothing." As if pre-empting the furious rebellion from Tumblr devotees, Mayer has pledged that Tumblr will remain independent and David Karp will remain CEO and continue to have creative control over the platform. Christophe is dubious: "How independent can [Yahoo] allow Tumblr to be if they actually want to monetise the service. Is this just a beautiful promise or is it actually achievable?"
Tumblr's identity is notoriously strong. It's values are reflective of Karp's own: innovative, bold and edgy. Many Tumblr bloggers, most of whom are too young to remember those old Yahoo yodelling adverts from the early nineties, are passionately opposed to what they see as a corporate machine, stamping its logo and advertising all over their site.
There's also the question of porn. According to Christophe 10 per cent of content on Tumblr is explicit. "It's really strange for a massive tech company to quite legitimately own a lot of porn content," Christophe says, "and of course Yahoo is not going to be able to crack down on this." Porn is as much an accepted part of Tumblr as is its fan art and animated GIFs and there is a fear among users that the platform will lose its editorial voice and feel if Yahoo were to try to clean it up.
One particular bugbear for Tumblr bloggers is how Mayer intends to "create advertising opportunities that are seamless and enhance user experience." "It sounds like a unicorn to me" Christophe replies, "no one has ever been able to do that." The potential of increased advertising that also disrupts the editorial feel of Tumblr has meant many bloggers are already abandoning the site. That rejection could ultimately spell bad news for Yahoo in the fashion stakes, leaving them exposed and ridiculed by a younger, cooler generation from which it so desperately wants to gain approval.