Will Yahoo Use Tumblr to Get Its Mojo Back, or Just Ruin It?

Alex Baker
Alex Baker Director of Communication, Screenpush

Posted on May 21st 2013

Will Yahoo Use Tumblr to Get Its Mojo Back, or Just Ruin It?

yahoo tumblrDays after Yahoo announced it would be integrating Tweets into its newsfeed the aged Internet giant has now completed a $1.1 billion acquisition of Tumblr.

Tumblr, the micro-blogging site that’s risen to popularity on a wave of GIFs, over-sharing, and porn, was previously valued at around $800,000 million dollars. However many insiders regarded even this number as high, considering David Karp, Tumblr’s CEO and founder has often expressly stated that he’s not interested in making money.

Yahoo’s Quest for Fountain of Youth

Nonetheless, the $1 billion dollar transaction is the biggest the web has seen since Facebook bought Instagram in 2012, and appears inline with many of the moves Yahoo has made since Marissa Mayer took over as CEO last year.

Since then, Yahoo has been looking to cover up a few grey hairs and reconnect with the coveted 18-24 year old demographic. Yahoo CFO Ken Goldman, speaking recently at JP Morgan’s Global Technology conference in Boston explained “One of our challenges is we have had an aging demographic. Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”

Mayer’s Eye for Tumblr

Yahoo’s acquisition of Tumblr comes not completely out of the blue. Mayer has already acquired around 10 smaller startups since taking over as Yahoo CEO in July of 2012.  But those other acquisitions were much smaller and only added up to about $16 million in total, chump change by the standards of Internet megaliths. And back when Mayer was a Google exec she kept a close eye on Tumblr’s rapid growth.

Yahoo is banking on the notion that the acquisition will lead to some of Tumblr’s cool factor rubbing off on what many perceive as an aging network that’s struggled to remain relevant in recent years. Tumblr meanwhile, will likely be looking to benefit from Yahoo’s ad network and business savvy, in the hopes of emerging with something like a workable business plan or strategy for monetization.

King Midas in Reverse?

Of course, there is also the danger of a kind of King Midas in reverse syndrome, in which Yahoo short circuits Tumblr’s cool factor, either by tinkering with things too much or just by absorbing something that’s perceived as cool and cutting edge into a larger organization that’s regarded as passé and institutional in tech terms.

Yahoo also has a well-publicized history of failure when it comes to such acquisitions, that stretches all the way back to Geocities and includes more recent missteps like Flickr. But this time the aging Internet monolith has promised, “not to screw it up.”

While there is plenty that could go wrong, Yahoo need only look as far as Facebook’s acquisition of Instagram to see how things could go right. Instagram, although a property of Facebook, has largely been left on its own and Yahoo seems intent on doing the same with Tumblr, porn, GIFs, and all.

(Yahoo & Tumblr: good luck / shutterstock)

Alex Baker

Alex Baker

Director of Communication, Screenpush

As the Director of Communication at Screenpush, blogger, journalist and copywriter Alex Baker helps brands connect with their target demographic in the digital space. Although he is generally pretty up-to-date about the latest developments in social media marketing he needs to remember to update his Twitter more often. You can find Alex on Google+.

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Comments

Yahoo has not had "mojo" since the 90's.. if it were coming back, we'd have heard a new idea from them at least once in the past decade.

So why buy Tumblr?

Easy, they are playing the acquisition game that all large dinosaurs play. It's the only tool in their tool box.

The rules of the game are simple. When you are a big company, you believe that the company is big becuase of the bright people currently running it. So you assume that you can buy a company, pay more than it's worth, and grow it past what any rational assement would suppose. You bet big, cause small bets are just not worthy for a company your size.

And then there's the synergies. Why not combine A and B and get Q?... Cut costs and revenues will go up!

This game isn't limited to Yahoo! It's played by the big boys all the time. Failure of acquisitions to add value over what they companies might have been worth is as high as 90% (some argue it's only 70%.. but any study I've seen shows a clear majority fail).

Add to this the Yahoo! history of being a high tech player without innovation of their own and it spells doom for sure.

But what else could they do?

 

 

Yahoo is way too of an eady target for some. it's position online is the second/third place searchengine GLOBALLY to Google. That isn't a bad position, if you think that disaster may still befall PAlo Alto at some point in the futurem and the Brin/Page algorythm may not be the single biggest invention since fire.

They don't have to get older, they have to get more pervasive, and spread the brand. Who cares if their purchases have been minor? Many complex engineering projects are hinged by a single, cheap pin. Old? So is Rolls_royce, but their name is still better than Tata.

This is a fairly cheap purchase when looked at as newly acquied members per dollar'. Perhasp Meyer can show everyone how Yahoo is going to use these new members and turn them into evangelists. After so long in business, Yahoo knows how to do somethings very well. Have you seen the new G+ update? Yuk! Beginner's Bad.

I think Mayer is actually doing a great job of injecting Yahoo back into the conversation by making it a "hot topic" again. Full disclosure, I've always liked Yahoo but any property that's been around for that long has to fight against the perception that it's outdated, lest it be resigned to the dustbin of history like AOL.