Tumblr was supposed to speed up Marissa Mayer’s turnaround of Yahoo when the portal announced it would acquire the social network for $1.1 billion in May 2013, 10 months after the former Google exec took over as Yahoo’s CEO. Of course, Tumblr was also supposed to generate $100 million in revenue last year. Neither outcome has materialized.
Even with more than 500 million people checking out Tumblr each month, Tumblr failed to reach its 2015 revenue goal. And Yahoo is in a tailspin, with its board seeking a soft landing, likely in the hands of another company like Verizon. Things appear to have turned so sour that Yahoo’s sales teams are meeting with agencies not to sell them ads but simply the idea that everything’s okay at the company in order to avoid more examples of brands cancelling six-figure ad buys because of lost confidence in the portal’s business, according to one person familiar with the matter. A Yahoo spokesperson did not respond to a request for comment sent on Wednesday.
Based on interviews with several agency execs, the feeling is that Yahoo has mismanaged the Tumblr acquisition. Complaints extend beyond brand-safety concerns and criticisms of Tumblr’s shallow ad-targeting options, though those remain. Additionally, neither company did a good job of helping brands get their Tumblr blogs up and running, a prerequisite for buying the platform’s primary ad format. And after Yahoo took control of Tumblr’s ad sales in February 2015 — seemingly in order to better package the portal and social network — Yahoo’s sales team neglected to make much effort selling Tumblr.
But now, in the shadow of its parent company’s demise, Tumblr is trying for its own revival. It has begun to pitch agencies on “blogless” sponsored posts, dropping the requirement for brands to operate a Tumblr blog in order to run sponsored posts in users’ feeds, or dashboards. And as Business Insider reported in February, it has retaken control of its ad sales.
”While we experienced a slower ramp in monetization than we initially expected, we’ve seen continued growth across all areas of the business, including revenue, users, and engagement. Since the acquisition, Tumblr has introduced a number of innovative ad products to maximize value for our advertisers and best meet their needs. To further support these efforts moving forward, we have returned to a Tumblr-dedicated direct sales team,” a Tumblr spokesperson said in an emailed statement, declining to make a Tumblr exec available for an interview.
“It was a billion-dollar bet that certainly has not yet paid off,” said Ben Winkler, chief digital officer at Omnicom’s OMD. “From a social platform perspective, it’s simply not on the radar for most of our clients once they get through Facebook, Twitter, Instagram, Pinterest, Snapchat. There’s not much left over for the folks at Tumblr.”
With its sales team back at the helm and removing a big barrier to buying Tumblr ads, Tumblr execs have been meeting with advertisers and agencies in an effort to repave its ad business after a bumpy past few years.
“It’s getting on the same page of what we’re looking for from them and what are our top priorities,” R/GA strategy director Dave Surgan said of the meetings. “It was really about their roadmap for the year and making sure they’re aligned with what our needs are.”
That might sound like an introductory meeting, and it some ways that’s exactly the kind of meeting Tumblr needs to be conducting considering its recent history. When Yahoo announced it was acquiring Tumblr, the social network was young, with a lot of upside. It was like a college basketball player who had a solid freshman season but was still growing into his body and developing his shot when he got drafted into the NBA. Tumblr’s ad business was only a year old when Yahoo bought the company, and Tumblr had only begun placing ads in users’ main content feeds a month earlier.
“There was certainly an uptick immediately after the acquisition where Tumblr got enough press and was top of mind for senior execs. But I think after that blip it faded into the background a little bit,” said Jesse Cahill, head of media for North America at Essence, which is owned by WPP’s media-buying arm, GroupM.
One cause for the optimism surrounding the acquisition was the hope that Yahoo would be able to help Tumblr’s ad business mature. Tumblr had piqued marketers’ interest for what was perceived as a broader creative canvas than other social networks like Facebook and Twitter offered at the time, and Yahoo had purchased it early into the renewed focus on brands producing content that didn’t look like a traditional ad. The native advertising trend was just getting started, and so was Tumblr. But neither could take off without brands on board.
Tumblr’s creative canvas has been something of a double-edged sword. Many brands like Warner Bros. and Nestle gravitated to Tumblr as a hub for the branded content they were publishing online that’s easier to maintain than a standalone site. But many more seemed to be held back by the specialization and extra effort it required compared to their Facebook or Twitter accounts.
“Customization is a blessing and a curse. Many if not most clients are looking for turnkey solutions, not empty canvas solutions,” Winkler said.
“If you’re thinking about launching a Facebook or Twitter channel, [the planning process] is really just ‘what’s your channel art, what’s your first bunch of posts to push live during the launch period and what’s the operational model?’” said Michael Fasciano, VP/director of Digitas Studios. “With Tumblr it’s really about custom-creating a whole look and feel and experience, just as you would any other site.”
Additionally, Tumblr’s audience appears to reward brands that focus their presence, like how normal Tumblr users may operate Tumblr blogs dedicated to minutiae like drunk furniture and objects that can be converted into beards. “Whenever we launch a Tumblr with a brand we generally have a very specific angle for it, as opposed to it just being ‘follow us for more general brand updates,’” said Surgan from R/GA.
Running a Tumblr blog isn’t “overly cumbersome as long as we have the right lead time,” which means time to plan out the content strategy and put pieces in place. Tumblr’s team “is able to help you though some of that process,” he said, referring to consulting on designs and themes and helping to secure trademark URLs. But marketers apparently need more help than Tumblr has been able to offer.
Unlike a Facebook page that could be managed by an art director, copywriter and social strategist, a Tumblr blog also requires a tech person who can handle coding and user experience, said Fasciano. “It’s a larger beast, and I think if the Tumblr team can find a way to support that added challenge, they would have more brands jumping into the platform,” he said.
One would think selling to Yahoo would have helped Tumblr address that challenge. Not only would Yahoo have offered more resources in the form of money and head count, but it also had longstanding relationships with a large number of advertisers. Yahoo could have done for Tumblr what Facebook did for Instagram. Instead, it appears to have had the opposite effect, especially after Yahoo’s sales team took control of Tumblr’s ad sales in January 2015.
Yahoo’s salespeople have a solid reputation in the industry, but for pitching Yahoo, not Tumblr. “Tumblr is a different enough beast,” said Cahill, who said that Yahoo’s team would “underserve Tumblr” in meetings with Essence and its clients since the ad sales takeover.
“It tends to be the thing that is left to the very end of the meeting. You thought you would have 10 minutes for it, and you end up having 30 seconds and it becomes very much an afterthought,” Cahill said. “I think the association with the Yahoo behemoth has held it back.”
“They leaned too heavily on a sales force that didn’t understand the platform enough,” said Ray Romero, chief digital officer at GroupM’s MetaVision. He added, “From our side of the table it’s harder at times to put the pieces together when they don’t know how to put the pieces together themselves.”
Now, Yahoo is letting Tumblr put its own pieces together again and making it easier for brands to advertise on Tumblr without managing a Tumblr blog, but is it too late? Apparently not. While several of the agency execs Marketing Land interviewed for this story said that Tumblr has fallen short of the expectations levied on it at the time of the Yahoo deal, all said it’s too early to write off the company. “I don’t think Tumblr’s missed its moment,” said Fasciano.
Comments