Quick Thoughts on Yahoo/Tumblr (maybe) Marriage

(Image via Softonic.com)

Tumblr has a problem. And it looks like it’s about to be Yahoo’s job to fix it.

Over the weekend, the Web 1.0 company that made its fortunes in display advertising was rumored to purchase the upstart media company, which has only recently gotten into the advertising game. Yahoo’s board is meeting tonight; there’s an impromptu Yahoo product announcement in NYC tomorrow. Yahoo to buy Tumblr for a billion American dollars. Crazy.

(UPDATE: The Wall Street Journal reports that the Yahoo board has approved a deal to pay $1.1 billion in cash for the blogging site Tumblr.)

Well, maybe not so much if you’re Tumblr. The company’s problem has always been revenue. (And porn. And missing letters.) After dumping in $125 million, Tumblr investors have to be anxious. The company pulled in $13 million in revenue last year. This year, its new sales head Lee Brown told Bloomberg Tumblr will cross the $100 million mark. Now would be a good time to sell, especially when you see Instagram get sold for $1 billion last year and Twitter scheduled to go public next year.

The problem, however, is a long term one. Brands and agencies I speak with don’t care about Tumblr. At least not in the same way they care about Twitter or Facebook. Twitter and Facebook are must buys and must haves. Tumblr not so much.

One, Twitter and Facebook, at this point, are easy for brands and agencies to understand. There’s protocol. There’s strong hand holding from Twitter and Facebook. And it’s easy to buy Twitter and Facebook. You know your target audiences and how to reach them on Twitter Facebook. Tumblr’s working on that, for sure, but it’s still in its adolescent stage.

Two, it’s hard to maintain and manicure a brand Tumblr. Unlike Twitter with its 140-character limit or Facebook with its thumbs-up likes, populating a brand Tumblr page takes time, money and resources brands either don’t have or see the point in parting with. While not a zero-sum game, brands need a reason to be on Tumblr other than it’s cool. Brands are on Twitter for variety of reasons, but mainly it’s a first line of communication defense. Customer service and PR work well on Twitter. So a brand is going to do what on Tumblr, exactly? GIFs?

That’s the challenge for Tumblr. Any brand can pony up cash for a promoted Tweet or sponsored post on Facebook. But to wade through Tumblr’s advertising morass, a brand has to already be there, creating content. This, they’re not doing in droves.

A Yahoo purchase can alleviate these pressure points. For starters, Yahoo sales team is a well-oiled machine. Yes, it’s currently undergoing some restructuring, shifting its model to lean more towards Google’s advertiser categories approach, but agencies and brands know and understand how Yahoo operates. That’s a big step for Tumblr. And there may be some moves between content deals and sponsorships, much like Yahoo has with ABC News.

But. Questions still remain. Will Yahoo continue its anti-Midas touch with Tumblr? Yahoo’s track record for major purchases — Flickr, Geocities are the shining examples — is less than stellar. Or, as Ian Schafer, Ceo of Deep Focus asked, “Can Yahoo help Tumblr make more than $100m in revenue without resorting to display ads?” And finally, will Tumblr users flee once the Tumblr blue morphs into Yahoo purple?