How will Yahoo monetize Tumblr?

By Events


It’s been an eventful week for Yahoo, and especially Tumblr, since Mayer announced their acquisition of the latter in her very own Tumblr account. Their owners, David Karp and Marissa Mayer, even came on to ABC News to discuss the deal. Mayer has been very careful to frame the arrangement as more a partnership than acquisition. Karp remains CEO, and Tumblr will remain a separate operation. Clearly, what Marissa sees is a potentially profitable community.

So, the question comes up; how will Yahoo monetize Tumblr? Although it would seem obvious to emulate models used by other social networks, Tumblr actually has some mitigating circumstances that could prove challenges or opportunities in the future.

Before we get to that, we need to discuss what they have actually laid out. Business Insider got the inside scoop on how they intend to launch their new ad platform, involving placing advertisements ‘in-stream’, meaning it will be blended in with the regular tumblr feed of posts that users currently use. Tumblr plans to roll this out slowly, with the pilot program targeting the biggest advertisers, who can afford to invest a minimum entry fee of $ 200,000. You can read the other requirements and view the slideshow here.

Prior to this, Tumblr had been making the slow transition into monetization. Karp has repeatedly shared his sentiment that monetization was not a priority, but it was not like he did not want to do advertising, he just wanted to manage a certain amount of control of it.

As outlined here, advertisers weren’t allowed to make the same kind of ads they made in other social networks. Tumblr required they make their own blogs and get creative. Advertising was then featured in two ways; a Tumblr Radar box to the right of the feed featured interesting as well as promoted posts. Users who searched tags can also deliberately go to Tumble Spotlight and see what posts Tumblr was promoting there.

In this capacity, Tumblr was playing kingmaker, trendsetter, a unique role that had its own share of benefits and drawbacks. Mostly, they were able to control the quality of the advertising, which in many ways was near indistinguishable from the user created content on the site. The biggest problem with the approach is that they were limiting the potential to gain a critical mass of advertisers.

Tumblr tried out another early advertising experiment, which they opened up to regular users and big brands alike and had a notable effect on the community. For as little as $ 5, Tumblr users could ‘pin’ a post, so that people following them would see that sponsored post at the top of their feed every time they refreshed it, with new posts just below it. These pinned posts would stay in place for 24 hours.

The Tumblr community would eventually grow to loathe the feature, and of course expressed their displeasure on their very own tumblrs. And so, at the start of 2013, they removed the functionality with a little dashboard update.

You may be wondering at this point though, why did Tumblr open this up to their own users? Why so cheap an asking price and give this functionality to everybody? The funny thing is, as much as Tumblr’s openness has created foreign internet subcultures like reddit and 4chan have, it also has the qualities of a Pinterest and etsy. Thanks to its easy user interface and the nature of how it built its community, tumblr became a go-to place for graphic artists, photographers, handicrafts, etc. Many craftspeople in etsy did make Tumblr posts that pointed back to their etsy accounts. (Etsy, of course, eventually joined themselves and showcase their best users’ work in it.) Tumblr nurtured what I would call a quasi-catalog of people’s best works, to many admiring user’s eyes.

Unfortunately, this community also faced another challenge that directly affected their bottomline: non-attribution. Tumblr’s ‘free’ nature encourages people to share roughshod, and in many cases creators and content owners don’t get credited in these posts. Even worse, stealing content and claiming it was a common practice. This hurts small creators the most and is a very old issue in Tumblr itself that, in my opinion, will never go away.

I have a personal favorite tumblr to follow for amazing arts and crafts. It used to go by the name bookpaperscissors, and it developed a huge following purely on the quality of the work posted. At a certain point, bookpaperscissors curator Clare decided she wanted to use her Tumblr to empower the artists who make this work by connecting them directly with the blog’s followers. To make a long story short, she rebranded the site to sosuperawesome and tried to monetize the blog for the creators.

Clare has not explained it in detail, but as her about page explains, the monetization arrangement simply did not work out. The rebranding has stuck, however, and moving forward she has made it a point to share links to the original creator, their online store, and promote their events, when possible. She has also created a Facebook page that basically points back to tumblr.

I wanted to highlight sosuperawesome to bring to light a unique challenge Tumblr could address and help add value to users. Tumblr blogs can develop huge followings, and allow users to promote their work organically. However, there is no advertising system set in place for those users to sell their work effectively. On this end, we can say that Pinterest may be competitive with Tumblr, and Pinterest users may more easily leverage their following to ROI. However, only a fool would dismiss the popularity of older Tumblr blogs like sosuperawesome, that continue to grow their following in a unique and as yet-untapped way.

And so we come full circle. Yahoo’s immediate plans for Tumblr monetization seem to simulate Twitter’s plans for monetization, particularly Twitter Amplify. Karp says he likes the kind of advertising that has ‘made Vogue a better magazine.’ Yahoo might share some of its technology with Tumblr for even more possibilities, as outlined here. However, to fully optimize Tumblr would be to allow its users to monetize their blogs themselves, to give creatives a platform to reach out to their own followers, possibly make an online marketplace there.

To sum, I’ll share the video interview by George Stephanopoulos of Mayer and Karp below: