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Yahoo’s Tumblr Buy May Have Been a Smart Move After All

A lot of people were shaking their heads when Marissa Mayer of Yahoo gave the green light to the Tumblr acquisition. Tumblr, in case you have been hiding under a rock, is a blogging platform that allows people to generate traffic and content at a click of a mouse. How? You can easily re-blog stuffs that you like when you follow other blogs and it’s also easy to get followers through Tumblr. This is why many spammers use Tumblr because it kills two birds with one stone. This revolutionary blogging platform that is very easy to use and very fluid is the reason why it grew so fast.

Just how big is Tumblr? Tumblr is composed of close to 150M blogs. In that 150M blogs, 99M posts are made every single day. If that isn’t awesome enough for you, you have to keep in mind that the whole network of blogs already has 65B posts— that’s billion! All this development was enough to put Tumblr in the number five position of web traffic in the United States. As we all know, Yahoo’s old acquisition model has been to just chase after traffic. If you have a web site that got a lot of traffic, Yahoo will come knocking at your door.

The good news is that it made you a lot of money. The bad news is that Yahoo usually ends it up failing to incorporate the acquisition very quickly or very well. As a result, Yahoo doesn’t really benefit all that much. It did this most famously with Geocities. Well, it looks like things are different with Tumblr because when it was sold for over a billion dollars, it was not monetizing all that traffic. If you’re getting that many posts and millions of visitors, you would know that the traffic can translate to a pretty penny.

Unfortunately, Tumblr wasn’t really doing that good of a job of monetizing that traffic but that’s going to change now with Yahoo in control. Yahoo has a robust ad network and has enough customers to basically sell that inventory. How much are we talking about? According to certain estimates, Tumblr’s advertising value is undervalued by as high as 450% so if this is true, then whatever price Yahoo paid for Tumblr might be more than justified because Tumblr has the traffic to be able to get ad revenue that can pay that acquisition price sooner rather than later. Good move once again Yahoo!

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