It is hardly a secret that Yahoo's $1B purchase of Tumblr was met with reservation and skeptic by shareholders, analysts and the general public. At first, the acquisition felt like Marissa Mayer's "me too" moment as Google and other competitors snatched up platforms and social tools left and right. Did Yahoo have a plan all along? It might just seem that way.
When Tumblr recently announced the launch of a new embedded video player, curious ears around the social world perked up - and for good reason. The video player was apparently the first step towards a much larger shift for the microblogging platform. This week, Tumblr announced the beta launch of their new sponsored video posts ad offering. Currently being tested by an invitation only group of brands such as J.C Penny, Hulu, Universal and others, the offering will hit the public screens in mid-November.
While the auto-play sponsored video posts are not a groundbreaking ad format, it's a major step for evolution of the underdog Tumblr. Loyalists have spent years touting its simple functionality, community aspect and discovery elements, but the company has never truly ventured into the monetization area, making just $12M in 2012. What most people don't know is Tumblr has been experiencing exponential growth - 71% year-over-year monthly mobile active users and 122% year-over-year mobile engagement.
Yahoo on the other hand has been working to find it's own identity. Yes, they have been booming as of late due to a 15% share in a little company called Alibaba, but it has been a while since the former industry leader had its own offering to stand on. But now comes Tumblr video ads, a potential $100M per year revenue driver. Moves like these can help explain the influx of top talent, such as the hiring of former Amazon sales executive Lisa Utzschneider.
A highly trendy and millennial based microblogging platform. Video ad units. Flocking top brands. The ingredients for a new top player in the social game are all there.