Should the market care about Tumblr?

Tumblr 1Last night saw Australia became the first market outside the US to see social platform Tumblr launch commercially. Nic Christensen looks at what the play means for Yahoo7 and where it fits in its push to build new digital revenues.  

“We definitely have a reputation as a youth platform,” 28-year-old David Karp concedes, before quickly adding: “But Tumblr reaches a pretty diverse audience.”

The founder of Tumblr, who sold the social platform to Yahoo in 2013 for US$1.1bn, was speaking to journalists last night following the Australian launch of the commercial side of tumblr. 

Karp and Harrison

Karp and Harrison

Alongside him was Yahoo7 chief Ed Harrison and together the pair were making the pitch for how Tumblr could help brands engage younger audiences with unique content.

“We have been changing the business,” Ed Harrison had told a room full of media buyers earlier in the night. “Really quite fundamentally.”

“We are building a new business around growth areas, we are talking about mobile, video, native and social. If you think about those things and their importance to us more than half of business and assets are in those areas.

“Of course there is the social piece – that is where Tumblr fits in. Tumblr is the last piece in that jigsaw for us in our journey.”

Tumblr may well be an integral part of Yahoo7’s future, but it’s worth noting that it faces some stiff competition in the digital space.

And that’s not just online behemoths Google/Youtube and Facebook/Instagram, which posted 25 per cent and 74 per cent revenue growth respectively last financial year in media agency sales, according to SMI.

snapchat logoIt’s also Twitter, Pinterest and of course the supposed favourite among millennials at the moment Snapchat.

Harrison himself acknowledged this challenge but argued to reporters that Tumblr, as a microblogging platform, is a place where brands can be really creative and create unique and engaging content for what is arguably a youth-focused audience.

He cited launch partner Woolworths who to their credit have done a good job of building an engaging recipes site called Fresh Cravings on the Tumblr platform.

Screen Shot 2015-08-21 at 11.15.48 am“Woolworths will be first cab off the rank and are a great example of a brand that owns already imagery of food and so we have taken it and repurposed it and had fun with it, particularly around the creation of GIFs etc,” he said.

“It is an exciting use of existing content into buckets around time of day and seasonal etc.”

Yahoo7 makes the fuzzy claim that it has an monthly unique Australian audience of 4.6m people, putting it a bit above the 4m Australian users Twitter claims, but to be honest there is some scepticism among media buyers about these numbers.

Especially when Tumblr is claiming that the average Australian user is spending 16 minutes per session on the site.

However, their real challenge will be to get brands to buy-in with real and engaging content that doesn’t alienate the current users on the platform.

To this point one of the most interesting statements from Harrison was actually around native advertising.

Native is something we launched in October last year, and it has grown at an incredible rate that we are now looking for publishing partners outside of the business to feed that supply,” he said.

Yahoo7 launched instream native advertising last year and the initial signs are clearly positive. Were they to bring on other publishers, like sister company Pacific Magazines, and even someone like Bauer Media (who have struggled to build local digital ad sales) then it could become a truly important source of digital revenue.

The Yahoo/Seven West Media joint venture has clearly come a long way from the Rohan Lund years when the company was still a player in search and spent some $40m on the failed Spreets venture, but has now refocused under Ed Harrison on: mobile; video (note this week’s Plus7 live streaming announcement); native and now social in the form of Tumblr.

That’s not to say Yahoo7’s troubles are over. Back in March, the company made 10 per cent of its workforce redundant and this week’s Seven West financial results showed earnings before interest and tax fall to $25.5m, 22.4 per cent down on last year.

They’re not alone – during the financial reporting season several traditional media companies (this week it was APN News & Media and Seven West Media) have pleaded the “soft advertising market” line to blame for their poor financial results.

This is despite SMI figures showing the paid media market from agencies ended the financial years on a record high $7.5bn.

I’d argue the challenge these traditional media companies face isn’t really “the soft market” but rather the difficulty they are having in building new digital revenue streams, which is logically being played out in market.

To this end, it will be a big challenge but it will be interesting to see if Yahoo7 can make Tumblr work for them and turn it into a truly valuable revenue stream without annoying its fans.

Nic Christensen is the deputy editor of Mumbrella. 

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Declaration: Yahoo7 advertises on Mumbrella through its Yahoo7 digital stars program. 


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