Must Read Political Tech Firms Eye Commercial Market In Pursuit Of Stable Budgets Demandware Becomes Salesforce Commerce Cloud: Now The Integration Begins Washington Post Builds Its Own Ad Tech To Speed Up Mobile Google Rolls Out Cross-Device Targeting, In-Store Attribution And TV Measurement Laura Ipsen On Using Oracle Marketing Cloud As The ‘Tip Of The Spear’ Rik van der Kooi On Microsoft’s Shifting Sales Structure, LinkedIn Data And Its Approach To AI The 4As Is Cracking Down On Transparency, On Its Own Terms The Trade Desk Share Price Surges In IPO Debut Maxus Global CEO Lindsay Pattison Speaks To Agency Challenges » What Yahoo Sees In Tumblr: A Logged-In, Cross-Channel Audience by Zach Rodgers // Monday, May 20th, 2013 – 11:29 am Share: There were two adjectives Yahoo CEO Marissa Mayer used repeatedly when discussing the advertising opportunity with Tumblr, which her company agreed to buy for $1.1 billion. Those words: "native" and "aspirational." It's what you would expect. In its short history of monetization, Tumblr has focused on organic ad formats, tentatively rolling out tools to promote organic posts. Yahoo execs, eager to demonstrate the huge price it is paying for Tumblr, are telling investors to expect ad revenue to go big-time in 2014. But there's an additional opportunity around ad addressability of the constantly logged-in Tumblr audience – across both web and mobile – that is increasingly valuable in this era of decaying cookies. Mayer hinted at this opportunity. "I don't want to pre-announce anything today," she said. "It is quite clear that the psychographic profiles on Tumblr are different than we have on Yahoo, which enriches the user base." What "psychographic" data are we talking about? Whereas Yahoo is known for its strength in finance, news and sports, Tumblr is a hotbed of fashion, design, architecture, and art, Mayer said. So the profile data Yahoo uses to reach Tumblr users across websites and devices may be linked to related advertising categories. Regarding monetization through exchanges versus custom and direct served advertising, Mayer said, "I imagine there will be a bit of both. I would expect that any ad units we create would be very native and follow the form & function of either site." Of course, native advertising is not incompatible with exchange-based selling, as the Facebook Exchange has taught us with the recent introduction of retargeting to its News Feed inventory. But by and large, Mayer sought to divert her comments on advertising away from the dormant potential in Tumblr's user data and toward ads that embrace quality. "David [Karp] and I both share a love of pop culture," she said. "And he talks wistfully about the ads he would see as a child that would make him want to see a movie or love a certain kind of car." She added that by and large, "Internet advertising doesn't aspire to be as good as the content itself." One could speculate that this is the message Mayer needs to tell, since Karp is notoriously allergic to Internet advertising and because assuaging Tumblr employee and user worries about intrusive advertising and data use is job #1 at the moment. Hence Mayer's remarkable pledge, "We Promise Not To Screw It Up." There are a couple of ways to interpret this line. One is that Yahoo clearly realizes users are worried it will take their baby and drop it on the floor, as it did with Flickr and numerous other product acquisitions. Compounding that factor is that M&A seems to be tougher when the acquired startups are social media companies. Microsoft/Skype, Aol/Huffington Post, and Advance/Reddit all come to mind, but it wasn't those companies that Mayer invoked. Instead she referenced eBay/PayPal and Google/YouTube as examples of successful mega-deals, and she said Yahoo will follow their playbook by sharply delineating the companies on the front end. In other words, there will be no Yahoo branding at all on Tumblr. Back-end integration is another matter of course, and infrastructure and data tie-ins are a Trojan Horse in this deal. Not that Yahoo needs an ace up its sleeve, necessarily. Tumblr's audience of 300 million unique users is less than half that of Yahoo's, and so the purchase price represents nearly $3 per user. But they're young (more desirable to advertisers), their site visits are linked to a login (addressable), and they're heavy users of Tumblr's mobile app (cross-channel). The revenue question came up repeatedly during the investor call. Tumblr has shrugged off monetization, offering a small menu of native ads geared to promoting organic content. These are called Pinned Posts, Highlighted Posts and Radar ads. On the data front, Tumblr at this time collects no data at registration other than age and email address. Will that change? Mayer was asked that question today, but demurred. John Ebbert contributed. Add a comment Click here to cancel reply. Name (required) Email (will not be published) (required) Website Comment XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> Notify me of follow-up comments by email. Notify me of new posts by email.