What does Yahoo's purchase of Tumblr mean for the site—and its users?
Tumblr's co-founder David Karp once said the best thing about dropping out of high school at 15 to work for The Powerpuff Girls studio was getting to act like an adult, "wearing what the twentysomethings were wearing in the office—collared shirts and rolled-up sleeves." Over the weekend, Yahoo's board of director's approved a $1.1 billion bid to buy microblogging site Tumblr, fulfilling Karp's lifelong fantasy of fitting into a grown-up role.
And with Yahoo’s purchase, Tumblr is essentially opening its userbase to advertisers as a volunteer army of telemarketers.
Founded in 2005 after the then 19-year-old Karp discovered the idea of "tumblelogs" such as Christian Neukirchen's Anarchaia, Tumblr was meant to free blogs from having to use walls of text to communicate by using a combination of images, links to other stories, and videos as a new way to glimpse the flowing psyche behind linguistic pomp. After a private beta, the tool was released to the public in early 2007 and by the end of the year it had been valued at $3 million. A few years later, its value had grown to almost 400 times that freshman sum.
Tumblr's rapid growth can be seen as a reaction to the parallel growth of the Internet as a retail environment, with nearly every use underwritten by advertising. In the years of Tumbr's existence, Internet advertising revenues have more than doubled from less than $4 billion to more than $8.4 billion.
As banner ads, sidebar promotions, and pop-up commercials became more familiar, Tumblr turned into a de facto shelter, where people could cull what they wanted and share it with a network of followers who could choose to identify as anything they wanted.
Throughout its rapid rise, from 75,000 blogs in its first few weeks to the 107.8 million it claims today, Tumblr has never made as much money as it cost to operate. It spent between $4 and $5 million a month as of late 2012, while only earning $14 million for the year. But the company was able to get new rounds of investors to support it on the faith that an audience that big would have to be worth something to someone.
And so advertising became an inevitable part of the company's strategy. The model relies on its users, with only content that's interesting enough to reblog being of value to advertisers. The optimal Tumblr advertising campaign, Karp explained to The New York Times, is "intended to make you feel something for the brand."
This opaque observation could be said of any advertising, but the underlying implication is that a Tumblr user who's been made to feel a sudden emotional attachment to a brand through a video or captioned image will then act on that emotion. They don't have to go out and buy a new bottle of cologne or go test drive a new car, they just have to turn over their blog to the brand. In return, the brand promises to try and make their propaganda as tasteful and convincing as possible.