Yesterday, I woke to find that the rumors that had been flying over the weekend were true—my former employer Yahoo! was buying Tumblr. During the course of the day I read a variety of articles debating the merits of the deal and speculating about just how rich David Karp is going to be. This is an exciting and important event for Yahoo! and Marissa Mayer’s strategy but so far the news and commentary on the announcement missed several key points about its importance to the company and the social market right now.
1. Tumblr is a game-changing move for Yahoo!
Buying a major social network is a strategic move that launches them back into the social conversation as a top tier player much like YouTube was a game changer for Google. Its easy to draw comparisons between the Tumblr and YouTube acquisitions and I think the implications of that comparison haven’t really been covered. I was on the front lines of Yahoo’s battle against Google from 2002-2006 and I can’t describe what an immediate game-changer YouTube was for Google. It enabled them to pull ahead of Yahoo! in international partnership discussions and changed the power dynamic in major regional deals.
In less than six months, I saw Google move from the number three player to the leader in many key non-US markets. Yes, the property and product integration will take a while but the perception of the integration is immediate. Anecdotally, I’ve already seen that advertisers around the world view Tumblr/Yahoo! as very beneficial to their strategy.
I also saw the negative effect of not buying a major social network. Yahoo! came very close to buying Facebook. Can you imagine what Yahoo! would be today in social, desktop and mobile if management hadn’t fumbled the deal? Having a vibrant social network is absolutely critical for Yahoo!. Google’s incredibly persistent efforts to build Google+ have made it so.
2. Tumblr will help grow other Yahoo! properties
There are thousands of Tumblrs that are complimentary to Yahoo!’s core properties and could drive additional traffic to them. Yahoo! knows the importance of driving traffic and monetization. They will help Tumblr monetize and will do so without alienating users. The perfect model to emulate as they go through this evolution is Twitter.
Anyone that thinks ads of any kind are going to ruin Tumblr should look closely at Twitter to see what is actually likely to happen. Twitter introduced the idea of ads in April 2010 and just recently announced the general availability for US advertisers at the end of April. You know what’s happened since Twitter made the first ad announcement? Traffic has increased 400%. People forget that ads tastefully done fund more engineers and designers, which is critical to making the product even better.
3. Yahoo! and Tumblr will bring more brands and Millennials together
At DataSift, I’ve been fascinated to watch social networks like Twitter, Facebook and others enable brands to build deep and meaningful relationships with their customers. The combination of Yahoo!’s brand name clout, their relationships with agencies and brands and Tumblr’s popularity with Millenials will be encouraging to companies who want to reach that audience. Tumblr can give all kinds of brands like Adidas, Puma, Michael Kors and more insights into what their target customers think of their brands and what their worlds look like.
4. Yahoo! just got an amazing product-oriented team
David Karp is a brilliant product visionary. The rest of his team is equally good. As a regular Tumblr user, I’m really excited to see where they take Tumblr post-acquisition with more resources and technology behind it, including the backing of product-driven CEO in Mayer, who clearly knows and values the impact of product and engineering.
If Marissa and team’s work on Flickr since she joined is any indication, Tumblr is going to get cooler and more fun to use. As a happy user (and occasional poster) on Tumblr, I look forward to their next stage of growth.
5. The Tumblr acquisition will help Yahoo! with hiring
I’m rather surprised this topic hasn’t been covered in more detail. With the Tumblr acquisition, Yahoo! just became a cooler place to work. In particular, Millenials want to work with cool technology that reflects their personal brands and preferences and they are the people aggressively using Tumblr today. From an employee recruitment and retention point of view, there is no downside to purchasing one of the hottest networks in social.
Social Networks like Tumblr are becoming increasingly important for decision-making across organizations, especially in Marketing. A deep understanding of the different social networks, their dynamics and audiences is critical for doing this well. At DataSift, I’ve watched our team of experts work with hundreds of companies of all sizes, from Fortune 500 to two person start-ups on leveraging the important Social Data created by different social networks. If Yahoo! can follow in the direction of other social sites, remembering to serve both their business customers and users, it will be a fantastic move for the company.
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