Yahoo is trying to buy social blogging platform Tumblr for $1 billion (or more). That would represent about a third of the company’s existing cash — though it stands to make more cash from its remaining Alibaba stake.
It’s a big bet and the type of high-impact acquisition that Marissa Mayer has wanted to make since becoming CEO of Yahoo. Why buy Tumblr? The reasons are almost self-evident.
Yahoo is a media/content company whose primary revenue source is display advertising. Tumblr is a massive user-generated content machine with a huge audience and page views (read: inventory). It’s a top 50 comScore property and has lots of SEO value.
According to Tumblr and comScore:
- There are 45 billion posts and over 100 million blogs hosted by Tumblr
- There were 29 million Tumblr uniques in March
- There were nearly 7 billion page views in march
- 47 percent of Tumblr users are in the coveted 18 – 34 year old age category
- Roughly 35 percent of Tumblr uniques earn over $100K
Tumblr also has significant mobile usage.
GigaOm’s Om Malik suggests that Facebook might try and swoop in to spoil the party. Facebook, too, needs younger users, hence its Instagram acquisition.
Talks could also break down, as happened in the recent case of video site Daily Motion, which Yahoo was also trying to buy. However, the failure of that acquisition was due to the intervention of the French government.
Beyond gaining a huge (probably new) audience and massive page views, buying Tumblr would also represent something that has long eluded Yahoo: the capture of a significant social-media property.
Postscript by Barry Schwartz: Yahoo has sent out an invitation to the press to attend a special press event this Monday. The event is being held in New York City at 5PM EDT and the rumors around this event are to announce the rumored Tumblr acquisition. The invite read, “Join us as we share something special.”