Did Yahoo Take a Tumble with Its Latest Acquisition?

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Yahoo is seen by some as an archaic search engine, but lately they have been making acquisitions to put a new pep in their step. Last month we reported that Yahoo shelled out $30 million dollars for Summly, an app designed to summarize news stories to make them easier to scan and search. But that was a drop in the bucket compared to their latest purchase.

Yahoo’s board has approved the acquisition of Tumblr for $1.1 billion. Before we discuss reactions to this merger and how it will affect its platform and users, let’s take a step back and answer one important question many of you may be asking: What is Tumblr?


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What is Tumblr?

For those who do not use the platform, Tumblr is an elusive creature, evading definition. This is due to the fact that Tumblr is in fact a hybrid, failing to fall into any one category. Tumblr’s about page sheds little light on what the site does and how it works, simply stating, “Tumblr lets you effortlessly share anything. Post text, photos, quotes, links, music, and videos from your browser, phone, desktop, email or wherever you happen to be. You can customize everything, from colors to your theme’s HTML.”

To put it simply, Tumblr combines microblogging with social networking to create a new amalgam that users swear by. The microblogging aspect allows users to quickly and easily share content using few words and little effort (hence the micro in microblogging). Social networking comes into play when users follow others on the site, reviewing and reblogging their content. This concoction has created a cult following and the site now boasts 108.8 million blogs with 50.9 billion posts.


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What does this acquisition mean for Tumblr and Yahoo?

We must say that this deal has led to success for Yahoo on at least one level in that it is creating buzz about the senior citizen site. People everywhere are reaching into the bookshelves of their mind, dusting off the long forgotten Yahoo volume and giving it a second look. But as we discussed a few weeks ago, not all press is good press.

For this tactic to really pay off for Yahoo, they are going to have to follow through on one big promise: to leave the platform as is. Yahoo claims that, “Tumblr will be independently operated as a separate business,” with current 27 year old CEO David Karp remaining at the helm. They went on to state, “the product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators.”

Tumblr’s fate, now irrevocably intertwined with Yahoo, also lies in its adoptive parent company’s ability to keep its word and allow the site to operate as is. One of the biggest threats Tumblr faces is the bigger push for integrated advertising expected to come with Yahoo funding. Though the site has already created and implemented a native ad system, but according to Tumblr investor Fred Wilson, backing from Yahoo will put Tumblr on par with Facebook, Twitter and YouTube in terms of advertising potential.


User Reactions

Tumblr users, especially the younger set, are being quite melodramatic about acquisitions. We’ve included some photos below to show you what we mean.

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Hopefully for Tumblr’s sake, Yahoo will keep its promise and the outrage will die down when users realize that the Tumblr they know and love is not going anywhere. If Yahoo reneges on their word it could send users running.


Our Thoughts

Only time will tell how this acquisition will impact both companies involved in the long run. Certainly there is potential for failure, should Yahoo redesign the site layout and functionality or make sponsored content too obvious rather than seamlessly integrating it with other posts, but there is also a chance that backing from Yahoo will lead to improvements in the Tumblr platform.

One of our team members, an avid user of Tumblr, pointed out that there is an opportunity here for Yahoo to provide real value to Tumblr users by creating an enhanced search function to help them find specific content on the site. Though we can’t predict for certain which way the tides will turn, we hope that Yahoo has just given Tumblr a promotion rather than signing its death certificate.

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