Online video website DailyMotion may have slipped Yahoo’s fingers few days, but buying blogging website Tumblr for USD1.1 billon more than makes up for it. The deal was reportedly approved by the Yahoo board on Friday, and the big announcement is expected today. It is known that Yahoo CEO Marissa Mayer is paying hard cash for the deal, and has made sure that Tumblr would continue to operate as an independent entity. However there is yet to be an official statement about this from the two companies.
So what does Yahoo gain from this? A strong presence in the social media space. While Google has been focussing on developing its own social network, Mayer took the easy way out by acquiring a passably popular social media entity. Tumblr was founded in 2007, as a simple to use platform to post blogs, upload photos, and follow other users. The updates were received via feeds. In fact Tumblr, sort of blurs the line between a blogging site and a social network. Yahoo will also gain a younger set of users. According to comScore the blogging site has around 117 million unique users across the globe. Market watchers report that by acquiring this blogging site Mayer is also upping Yahoo’s cool quotient, and making it more relevant to brands that are looking to reach younger set of trendy new users, mostly in the age group of 18 to 34. Yahoo is also expected to grow the advertising business at Tumblr to generate revenue that will add some attractive numbers to the company.
This also strengthens Yahoo’s already growing mobile business. In March this year Yahoo had acquired a mobile product company, Summly. It delivers snapshots of stories, giving the user a simple and elegant way to find news faster than ever before. While, Yahoo closed the Summly app, but took the technology to bolster its exiting mobile capabilities. Not surprisingly, Tumblr also has a very strong presence in the mobile space. While it started as a desktop application, Tumblrs popularity on the the mobile medium has grown a lot over the last few years.
Till now Mayer had been making small investments in acquiring small companies that would bolster Yahoo as a technology solution provider. With Tumblr Yahoo has also expanded its media offerings to advertisers.