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16 Months After Acquisition, Yahoo Hasn't Made Tumblr Uncool

Exec says his team has been able to 'maintain our independence'

Tumblr founder David Karp (L) and Yahoo CEO Marissa Mayer Photo by Mario Tama/Getty Images

There's a large portrait of wild horses in the elevator lobby at 35 East 21st St., Tumblr's home in New York. And 16 months after Yahoo CEO Marissa Mayer frankly promised "not to screw it up," the photo seems emblematic of the freedom that is still afforded to Tumblr's leaders.

Walking through Tumblr's four and a half floors of offices, filled with engineers, sales staff, community management teams and others, there's no sign of Yahoo, figuratively or literally. There's not a Yahoo-staffed office or even desk in the building. Yeah, $1.1 billion doesn't even get you a purple paper tray adorned with a "Y!" logo in this joint.

True to her word, Mayer has let this place alone.

"It's a very healthy working relationship where we are still able to maintain our independence but also have a lot of great access to the technology and financial resources they have to help us grow our business faster," said Lee Brown, Tumblr's global head of brand partnerships. "It has become more familiar, more comfortable. When you first come into a family, you don't know how you are going to work together."

Tumblr has has grown from 300 million to 400 million monthly visitors, according to the company's internal numbers, and has nearly doubled its number of user-generated blogs since the acquisition. The kind of growth is vital, especially now, when an investor with a significant stake in Yahoo has painted Tumblr with less-than-flattering colors. Whether or not the spendy purchase pans out, it can be argued that this was always a long-term strategy for Mayer—getting an aging Yahoo a foot in the door with millennials and the younger generation.

"Marissa wanted to let Tumblr develop along its predetermined path, and Yahoo wanted to play an enablement role," said Ned Brody, head of the Americas at Yahoo. "Which was to leverage our sales contacts and distribution platform, but not change what Tumblr is—what it is to creators."

For all the talk about the importance of maintaining a rich community of arty, self-styled bloggers, the acquisition was still a business deal. And to that end, Yahoo has helped Tumblr behind the scenes, developing native-styled ad products and introducing the platform to numerous Madison Avenue heavyweights. And the strategy may very well be working. Gatorade, BMW, Mini Cooper, Degree and MasterCard are some of the brands that have become ad-buying Tumblr customers in recent weeks.

"Our view has been to make the introductions and to work collaboratively with Tumblr to ensure that possible opportunities exist for our advertising partners," Brody said.

Can Tumblr Become Yahoo's Most-Important Platform?

The collaboration has allowed Tumblr to increase its staff from 173 to 283, including an engineering team that is now 100 people strong. "On the product side, we have to make sure we are on the bleeding edge," Brown stated.

Indeed, as Mayer emphasized at Advertising Week earlier this month, the Tumblr-like digital magazines her team launched at the beginning of 2014 showcase how the acquisition might help the company across properties, and perhaps turn around Yahoo's lagging advertising sales. The digital magazines include Tech and Fashion/Style, while last week Yahoo debuted a DIY zine that will focus on original videos, listicles and slide shows.

A source close to the situation told Adweek that such Tumblr-Yahoo integrations represent a belief inside Yahoo's Sunnyvale, Calif., headquarters that Tumblr can become the company's core product. When asked about that perspective, Brody quickly pointed to the digital magazines and didn't try to walk such a narrative back.

"I think it is the platform of the future for us," he said. "And we believe it should be the platform of the future for any publisher or brand."

More Like YouTube Than Instagram, Brown Says

With Instagram and Pinterest seemingly making the graphics-driven social space incredibly competitive nowadays, Brown contends that Tumblr doesn't share much of a digital kinship with those platforms. "I would liken us more to the creator networks like YouTube," he said. "Our network is not based on who you know, it's based on what you love. ... We want it to be all things whether text, animated GIFs, etc."

Sixteen months in, it's still early for Yahoo and Tumblr, especially since the former is sitting on a mountain-sized pile of cash, thanks to its Alibaba stock.

"We are pleased with the acquisition of Tumblr among multiple fronts," Brody remarked. "Revenue is certainly a primary [item on the] checklist, but so is product."

Yahoo has yet to break out Tumblr's sales in an earnings statement, which makes industry watchers wonder about the bottom line. And ultimately, investors will judge the acquisition by a single factor: Can Tumblr become a billion-dollar juggernaut that joins Facebook and Twitter as social platforms eating away at Google's digital advertising empire.

If Tumblr has a chance, mobile will certainly be key. "We are seeing a big shift in how people are using our platform in terms of content creation and consumption," Brown said. "Sixty-five percent of our consumption is [on] mobile devices."

As part of a three-part series on Tumblr, tomorrow we'll take a data-driven look at the platform's potential with smartphone and tablet-based ads while assessing persistent questions from marketers.

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