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In a huge all cash deal the Yahoo board of directors has approved purchase of social media giant Tumblr for 1.1 Billion dollars.\u00a0 For those not familiar with Tumblr, it is a blogging site that lets users post and share content with others.\u00a0 It is highly customizable, and incredibly popular, with about 75 million posts a day.\u00a0 This is a huge move for the internet powerhouse Yahoo, and only the beginning of changes being made by their new CEO Marissa Mayer.\u00a0 Buying Tumblr is, according to Mayer, \u201cthe stake in the ground of what her strategy is going forward for Yahoo.\u201d<\/p>\n
As part of the deal, CEO of Tumblr David Karp will get to stay on for a term of at least four years to retain control over most of Tumblr.\u00a0 However changes are expected to be made to Tumblr\u2019s advertising system, which although has generated a lot of revenue, isn\u2019t doing as much as it could.\u00a0 Ad\u2019s led to $13 million in revenue this year, and with Yahoo\u2019s help could be as high as $100 million this year, experts suggest.<\/p>\n
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Both sides stand to gain from this deal.\u00a0 Tumblr gains a large partner that can help drive its business, especially where it needs help (advertising).\u00a0 But a much more significant benefit exists for Yahoo, the audience it will gain.\u00a0 Tumblr\u2019s audience is young, hip, cool, and relevant to today\u2019s market.\u00a0 Although Yahoo was the site to be on for many in the 90\u2019s, Google and Facebook now own most of the youth central sites such as YouTube and Instagram.\u00a0 Ken Goldman, CFO of Yahoo said that Yahoo\u2019s biggest issues were lack of marketing and to be \u201ccool again.\u201d<\/p>\n
\u201cOne of our challenges is we have had an aging demographic,\u201d said Goldman.\u00a0 \u201cPart of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.\u201d<\/p>\n
Gaining this audience will put Yahoo back on the map.\u00a0 Paired with other recent upgrades like Dropbox integration and removing attachment limits on emails, Yahoo will become a force to be reckoned with.\u00a0 Mayer knows what works; after all, she was one of the first 20 employees at Google.\u00a0 Since she took over in July of 2012, Yahoo\u2019s stock has grown significantly.\u00a0 Over 20 small companies have already been acquired by Yahoo, and they have made significant overhauls of their applications, paired with cutting costs to improve overall revenue.<\/p>\n
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