After two years in which Tumblr was for the most part allowed to manage its own affairs, Yahoo is moving to begin exercising more direct control over the social blogging platform it acquired for $1.1 billion in May 2013, according to The Information, which first reported the news on Wednesday. The Information claims the decision was announced at a meeting between CEO Marissa Mayer and top execs last week.
Reflecting the closer control that Yahoo will exert over Tumblr, founder and CEO David Karp will now report to one of Mayer’s senior vice presidents, The Information reports.
The move follows somewhat disappointing results from Tumblr, which has seen a big increase in user number but less explosive revenue growth. Back in April 2012 Tumblr had just over 50 million blogs generating 55.8 million posts a day; in February 2015 it boasted 231 million blogs generating 87 million posts per day. Meanwhile, the total audience increased from 300 million in 2012 to 428 million in mid-2014. However, the company will likely miss Mayer’s forecast of $100 million in revenue this year -- doubtless an ambitious goal, considering its total revenues came to $14 million in 2012.
However, it’s not clear exactly what impact closer supervision will have on Tumblr’s business operations or user experience. So far Yahoo has been cautious about upping the amount of ad inventory, as most ads are “native,” placed in user feeds through sponsored posts, potentially damaging user experience if too many start appearing; but investors have been demanding to see more return on the pricey acquisition.
One likely area of focus is more video advertising, enabled by a substantial revamp of Tumblr’s video player in October of last year. In January it launched its own creative agency, the Creatrs Network, which connects high-profile users with brands who want help being seen on Tumblr. Between its native placements and video, both of which fare well compared to other ad formats on mobile devices, Tumblr could be well positioned to grab more of this fast-growing category.
However, some basic obstacles remain, regardless of what kind of ad formats are on offer. Last year former Tumblr exec Mark Coatney argued that ad revenue growth was slow because Tumblr, which just requires an email address to create an account, couldn’t offer advertisers enough information about its users for targeting purposes. Some advertisers may also be leery of the blogging platform’s famously, ahem, liberal content standards, which allow a whole range of “NSFW” content including pornography.