Yahoo! / Tumblr – Diamond in the rough

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Tumblr is exactly what Yahoo! needs to expand its coverage of Digital Life.

  • The wires are alive with the idea that Yahoo! will announce its $1.1bn acquisition of Tumblr today at its event in New York.
  • 10x 2013 revenues looks punchy but the usage stats point to a website where the traffic is substantially under- monetised.
  • Tumblr had 184m unique visitors and 12.1bn page views last month (Quantcast).
  • Given that the site is almost unusable without an account, I estimate that the number of unique visitors is roughly equivalent to the number of accounts that the site had.
  • 184m is a big number. 50% bigger than the number of accounts on Yahoo! itself and comfortably above Radio Free Mobile’s 100m watershed between viability and failure.
  • Furthermore Tumblr is doing reasonably well in mobile which is somewhere that Yahoo! needs to urgently address.
  • Most interesting of all is the social networking functionality that Tumblr enables.
  • Blogging is all well and good but it is not a major activity that users do on mobile devices.
  • Social Networking on the other hand is, with users spending 24% of all their time on smartphones using social networking functions.
  • This is where Tumblr offers Yahoo! the users, the page views, the usage and the functionality.
  • All it has to do is tweak it a bit and make it a more viable competitor to Facebook.
  • If Yahoo! can do this well, then users will be much more inclined to spend time on Yahoo! services.
  • This means that Yahoo! will learn more about its users and be in a much better position to monetise traffic flowing through its servers.
  • Yahoo! has a vile history with acquisitions (Flickr, Geocities etc.) but I think things at Yahoo! have changed since July 2012.
  • Hence, I am hopeful that Yahoo! will not make a mess of Tumblr and that the acquisition will see Yahoo! meaningfully expand its appeal to users.
  • This will bring Yahoo! further into contention as one of the major ecosystems in the mobile smartphone world.
  • Yahoo! remains my dark horse as an ecosystem contender and if it gets it right, there is much further to go on the share price.
  • However, if it gets it wrong, this will be another expensive diamond that ends up as a worthless piece of coal.

4 thoughts on “Yahoo! / Tumblr – Diamond in the rough

  1. “Given that the site is almost unusable without an account […]”
    No it is not. If you are not a member, the sites on Tumblr becomes usual blog sites. Actually, there are many bloggers in tech or arts that use Tumblr for blogging. I started recognizing the page “themes” after a while.

    • That was in my experience. I found the site very limiting unless I signed up for an account…I agree its a good blogging site…That many blogs cant be wrong can they?

      • Yeah, without an account it is not a social network and valuations for blogging platforms are not all that high nowadays. If Yahoo is also assuming unique visitors is roughly the same as account holders, it may be overpaying. After HP Autonomy debacle, anything is possible. 🙂

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