Yahoo has officially announced its plans to acquire Tumblr for $1.1 billion. Much like Facebook’s $1 billion acquisition of Instagram in 2012, Yahoo’s latest purchase will bring the company a younger user base with the promise of more revenue.
Yahoo CEO Marissa Mayer said that she expects that Tumblr will give Yahoo’s traffic a 20-percent bump and could also expand Yahoo!’s audience by 50 percent to more than a billion visitors per month. The six-year-old blogging site is especially popular with a younger demographic — “the youngest of any site of scale,” said Mayer in a press call.
More than half the users are accessing the site through mobile devices and spending 7 sessions on mobile per day. Mayer says that the site is “ahead of Yahoo on mobile” and is calling the site “a game-changer.”
Yahoo will boost Tumblr’s monetization efforts by bringing its native advertising formats including Yahoo’s stream ads to Tumblr. Mayer described a “light ad load” that “follows the form and function of the dashboards,” as well as partnerships with certain bloggers to provide ads on their websites with their permission.
The startup’s current advertising business brought in $13 million last year, but continues to grow. Tumblr reported $13 million in revenue in the first quarter of 2013 and expects to bring in $100 million by the end of the year.
With new advertising options and revenue expectations come concerns that these efforts might diminish the experience for users. Both companies have promised “not to screw it up.”
Yahoo has also assured Tumblr’s users that the company will continue to operate independently with David Karp as the CEO. All of Tumblr’s 175 employees will remain on board, and Yahoo will be looking to bring additional salespeople and engineers to Tumblr as well.
Mayer wrote on the company’s new Tumblr blog:
In terms of working together, Tumblr can deploy Yahoo!’s personalization technology and search infrastructure to help its users discover creators, bloggers, and content they’ll love. In turn, Tumblr brings 50 billion blog posts (and 75 million more arriving each day) to Yahoo!’s media network and search experiences. The two companies will also work together to create advertising opportunities that are seamless and enhance user experience.
“We won’t let you down,” Tumblr’s David Karp wrote on the company blog, after assuring users that the companies “share a vision for Tumblr’s business that doesn’t compromise the community and product we love.” He signed the letter with a confident, “Fuck yeah.”