Yahoo has made its biggest deal by acquiring popular blogging platform Tumblr for a whooping sum of 1.1 billion dollars in a move to snag younger users into Yahoo!'s orbit.
Read more after the cut..
The two firms confirmed weekend reports of the tie-up, a deal which keeps the fast-growing Tumblr largely independent while integrating technology and advertising opportunities.
“Tumblr is a game changer,” Mayer said in a conference call discussing the acquisition.
“Tumblr is one of the fastest growing media networks in the world,” and “brings a significant new community of users to Yahoo!” she added.
This deal is expected to grow Yahoo! users by 50%
Mayer said Tumblr would operate independently but that the groups would “work together to create advertising opportunities that are seamless and enhance user experience.”
“We promise not to screw it up,” Mayer said in a blog post on Tumblr, as Yahoo! moved its official company blog to the new platform.
“The product road map, their team, their wit and irreverence will all remain the same as will their mission to empower creators to make their best work and get it in front of the audience they deserve.”
The deal, approved by the boards of both firms, is expected to close in the second half of the year, the companies said.
Yahoo! has been looking at a range of possible acquisitions since Mayer took the helm last year and vowed to revive the company, which has faded in the face of competition from Google.
Tumblr could be key to Yahoo!’s strategy because of its popularity with younger Internet users. A survey this year conducted by the online data group Survata found Tumblr more popular than Facebook among those aged 13 to 25.
While Tumblr generates very little cash, bringing it in the Yahoo! family could offer the potential for new advertising and other revenue sources.
“We hope this significantly contributes to our growth story,” Mayer said, adding that the two firms can create synergies because of their different demographics.
She noted that Yahoo! can integrate some Tumblr “streams” in its news and mobile feeds and can help the blogging platform develop better ads for its users.
“Tumblr is growing, and we think it can enhance the engagement on our media properties,” she said.
Analyst reaction was mixed.
Founded in 2007 and headquartered in New York, Tumblr says it has more than 108 million blogs, 50 billion postings in 12 languages and 175 employees. The website ranking site Alexa lists Tumblr as number 32 in terms of global popularity. (AFP).
Personally I see this as a good business strategy in so much that CEO Marissa Mayer does not crop out the brand uniqueness of Tumblr.
0 comments: