What will stop Tumblr's tumble?
21 July 2016
Three years have passed since Yahoo bought Tumblr, but the micro-blogging website has not proved to be the goldmine once hoped. Yahoo paid $1.1bn (PS830m) for the company back in 2013 - but it has since slashed $712m (PS541m) off its valuation. CNN Money has suggested that the acquisition is now "effectively worthless". Tumblr is a social network where members can post almost anything - photos, audio clips, videos, animations, feature-length text posts and more. It was set up in 2007 and brings together a staggering breadth of content, including craft tutorials, clips of TV programmes, mental health support groups, political satire, naked selfies, funny cat pictures and hardcore pornography. Members follow people who post the type of content they enjoy, and can repost items they like on to their own page, providing fertile ground for in-jokes and memes to go viral. One recent obsession involved gate-crashing innocent-looking videos with the loud trumpeting intro to pop song Run Away With Me by Carly Rae Jepsen. At the time of the acquisition - addressing concerns from Tumblr's fiercely loyal members - Yahoo chief executive Marissa Mayer promised not to "screw it up". Those who keep a close eye on services such as Tumblr say the site has been slow to add new features. Its latest big addition is live video support, following in the footsteps of Facebook, YouTube, Snapchat and Twitter-owned Periscope. "Tumblr has just added live video, and it's six months late," said Eleni Marouli, principal analyst at IHS Markit. "That's years in the technology world." A bigger concern is that the site cannot find enough advertisers to fill its available space. That could be, in part, due to the nature of the content on Tumblr - much of it adult-orientated, depending on whom you follow - although Ms Mayer blames the shortfall on a growing number of advertising formats. "Supply, because it's growing so quickly, is outpacing demand, and it's causing this monetisation shortfall," she said. Then there's the issue of mobile advertising. People are increasingly accessing content via mobiles, and Tumblr has been slow to react. "Yahoo has been very slow at deploying ads on mobile," said Ms Eleni. "Its mobile ad revenue is far below its peers in the industry." To plug its advertising gaps, Tumblr has called upon the Facebook Audience Network advertising service. That will fill some of the holes, but at a cost. "It will ramp up revenue quickly - but they will lose a slice of the money to Facebook with that deal," said Ms Eleni. And any increase in advertising on the platform is likely to meet opposition from the site's members. In the last week, many Tumblr members have been outraged at new invisible audio adverts that Tumblr appears to be testing. The maker of one ad-blocking browser plug-in has already published an update that will "terminate with extreme prejudice the auto-playing audio sidebar ads". Sites such as Buzzfeed tackle the dislike of intrusive advertising with "sponsored posts" - editorial content such as photos or videos with an advertorial slant. Ms Marouli thinks such a focus on "premium" content could help Tumblr in the future. "Snapchat, when it first started, was known as the sexting app. But it has managed to attract premium content on its platform and now has branded content deals," she said. "It's up to the management to make Tumblr more premium, but it's also very important that they keep their users engaged. "Whether it's too late, we will see." Tumblr could soon find itself in new hands, because Yahoo is selling its core internet business. US telecoms giant Verizon is said to be interested. It recently bought another faded star of the internet - AOL. Other rumoured buyers include mobile network AT&T and the UK's Daily Mail. Ms Mayer said the board of executives had made "great progress on strategic alternatives" - but there has not been an announcement yet.
Tumblr is a social network where members can post almost anything - photos, audio clips, videos, animations, feature-length text posts and more. It was set up in 2007 and brings together a staggering breadth of content, including craft tutorials, clips of TV programmes, mental health support groups, political satire, naked selfies, funny cat pictures and hardcore pornography. Members follow people who post the type of content they enjoy, and can repost items they like on to their own page, providing fertile ground for in-jokes and memes to go viral. One recent obsession involved gate-crashing innocent-looking videos with the loud trumpeting intro to pop song Run Away With Me by Carly Rae Jepsen. At the time of the acquisition - addressing concerns from Tumblr's fiercely loyal members - Yahoo chief executive Marissa Mayer promised not to "screw it up".
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What is Tumblr?
Those who keep a close eye on services such as Tumblr say the site has been slow to add new features. Its latest big addition is live video support, following in the footsteps of Facebook, YouTube, Snapchat and Twitter-owned Periscope. "Tumblr has just added live video, and it's six months late," said Eleni Marouli, principal analyst at IHS Markit. "That's years in the technology world." A bigger concern is that the site cannot find enough advertisers to fill its available space. That could be, in part, due to the nature of the content on Tumblr - much of it adult-orientated, depending on whom you follow - although Ms Mayer blames the shortfall on a growing number of advertising formats. "Supply, because it's growing so quickly, is outpacing demand, and it's causing this monetisation shortfall," she said. Then there's the issue of mobile advertising. People are increasingly accessing content via mobiles, and Tumblr has been slow to react. "Yahoo has been very slow at deploying ads on mobile," said Ms Eleni. "Its mobile ad revenue is far below its peers in the industry."
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What went wrong?
To plug its advertising gaps, Tumblr has called upon the Facebook Audience Network advertising service. That will fill some of the holes, but at a cost. "It will ramp up revenue quickly - but they will lose a slice of the money to Facebook with that deal," said Ms Eleni. And any increase in advertising on the platform is likely to meet opposition from the site's members. In the last week, many Tumblr members have been outraged at new invisible audio adverts that Tumblr appears to be testing. The maker of one ad-blocking browser plug-in has already published an update that will "terminate with extreme prejudice the auto-playing audio sidebar ads". Sites such as Buzzfeed tackle the dislike of intrusive advertising with "sponsored posts" - editorial content such as photos or videos with an advertorial slant. Ms Marouli thinks such a focus on "premium" content could help Tumblr in the future. "Snapchat, when it first started, was known as the sexting app. But it has managed to attract premium content on its platform and now has branded content deals," she said. "It's up to the management to make Tumblr more premium, but it's also very important that they keep their users engaged. "Whether it's too late, we will see."
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Can its fortunes be reversed?
Tumblr could soon find itself in new hands, because Yahoo is selling its core internet business. US telecoms giant Verizon is said to be interested. It recently bought another faded star of the internet - AOL. Other rumoured buyers include mobile network AT&T and the UK's Daily Mail. Ms Mayer said the board of executives had made "great progress on strategic alternatives" - but there has not been an announcement yet.
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What happens next?