Mobile Ads Could Make or Break the Yahoo-Tumblr Marriage

Will marketers buy in?

Headshot of Christopher Heine

Yahoo chief Marissa Mayer's $1 billion bet on Tumblr is undergoing a fresh wave of scrutiny thanks to a disgruntled investor as well as persistent questions from marketers. And later today when she discloses Yahoo's third-quarter earnings, Mayer is expected to unveil a fresh plan of attack for her company. It will be intriguing to see where Tumblr falls into the mix, as there are signs that the union may ultimately yield promising new mobile opportunities.

Last week in London, the tech duo pitched two cross-device, data-driven ad products that show potential. Earlier this month, 50 ad agencies convened at Yahoo's private annual summit on the Rhode Island coast, where Tumblr's smartphone-savvy millennial audience demo was pitched to marketers.

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“We believe that every one of those agencies represented will bring one new brand onto the platform in the next three or four months,” said Ned Brody, Yahoo’s head of the Americas.

According to comScore, Tumblr's mobile viewers were up 45 percent year over year in September. New York-based Tumblr's numbers state that 65 percent of its 400 million global monthly users employ its mobile app. And with mobile ad sales exploding for Facebook and Twitter, Tumblr's millennial prowess looms like an untapped beer keg for youth-minded brands. Give Tumblr credit: It’s not leaning on often dreadful display ads to create cash flow, instead focusing on a handful of native-styled products.

Starbucks reported positive early results for its trending blog promos on the social platform’s phone app, while Taco Bell and American Eagle are repeat customers. Ads appear alongside text blogs, video, GIFs and other multimedia. “It is very lightweight and has built-in virality,” Brody said. “And that’s really what a modern platform should have.”

While agencies are intrigued by Tumblr’s engagement with millennials, serious concerns remain. Sean Kegelman, evp of audience and strategy at VivaKi, said, “With Tumblr’s distinct environment, you’re not going to see a tremendous amount of paid advertising on it because brands need a lot of [complementary] content to make it work.”

Amy Peterman, 360i’s director of paid social, remarked that Tumblr’s ads are compelling, but added it hasn’t “done a great job of educating the marketplace thus far about what’s possible and how to use the platform.”

Dan Lubetsky, performance analytics lead at SapientNitro, agreed, asking, “What does a trending ad in Tumblr actually generate?”

Indeed, offering meaningful data will be central to whether Tumblr makes good on Yahoo’s expensive leap of faith. And so will selling ads to brands that take aim at Gen Y consumers who are glued to their handhelds.

“We are at a great inflection point,” said Lee Brown, Tumblr’s global head of sales. “Mobile is a big opportunity.”

This is the second installment in Adweek's three-part series on Tumblr's evolution since being acquired by Yahoo. Our first article looked at how the social site has retained its coolness since the purchase. In the final installment tomorrow, we'll see how major brands such as Gatorade, BMW and MasterCard are making the most of the platform's advertising and marketing products.

@Chris_Heine Christopher Heine is a New York-based editor and writer.