Despite Tumblr’s big plan to bring in over $100 million in ad revenue next year, not everyone sees a bright future for Yahoo’s social network.
In fact, research firm L2 now ranks Yahoo’s decision to buy Tumblr for about $1 billion as the worst tech acquisition of the past five years.
The harsh indictment is based on what L2 believes to be declining interest from Tumblr’s brand partners. The firm -- founded by Scott Galloway, a professor of marketing at NYU Stern -- found that 24 brands have ditched Tumblr over the past year.
Tumblr declined to comment on L2’s report, which claims to assess the social investment and performance of 382 brands across eight verticals and 17 platforms. Yet, a source close to Tumblr said the findings were completely unfounded.
For sure, many top brands continue to work closely with Tumblr. Just last week, Tumblr debuted its in-stream auto-play video ads with several launch partners, including Hulu, J.C. Penney, Lexus, Unilever’s Axe brand of products, and Universal. Another brand partner, The CW, is using the new format to promote several series, including “The Flash” and “Jane the Virgin.”
Last month, Yahoo said it expected Tumblr to take in more than $100 million in ad revenue -- and achieve positive EBITDA -- next year. Coming from CEO Marissa Mayer during Yahoo's quarterly earnings call, the disclosure offered a rare glimpse at Tumblr’s financial health.
Breaking down Tumblr’s ad business, Mayer said 150 brands now have a presence on the social platform.
Since dropping about $1 billion on Tumblr last year, Yahoo has made a number of efforts to begin monetizing the social network. Most recently, Yahoo announced the launch of a new content marketing solution built specifically for Tumblr.
In its latest report, L2 also takes aim at Vine and Pinterest. Among other discouraging stats, the firm found that 55% of Vine accounts had not posted through the first half of the year. As for Pinterest, while its community sizes have doubled, absolute engagement has not budged over the past year, while engagement rates are off 65%, according to L2.L2 defines absolute engagement rates as the total number of interactions -- including “likes,” comments, and shares -- that brands accumulate. It bases brand content performance on total interactions, while engagement rates are determined by the number of interactions per post and community size.