Yahoo CEO Marissa Mayer took a call with investors Monday morning to address Yahoo’s $1.1 billion cash acquisition of Tumblr, fielding questions about how Yahoo plans to monetize a company that is not yet profitable but has a large and growing userbase.
Perhaps most interesting for existing Tumblr users is Yahoo’s plan to bring ads directly on to Tumblr blogs for users who want them.
“[We] see some opportunities to work with bloggers who want ads, to provide ads on their website[s], done with bloggers’ permission,” she said.
Yahoo will also to look to introduce more ads into Tumblr’s dashboard (i.e., newsfeed), where it already runs some advertising. Mayer was quick to assure listeners that the ad load would be “very light,” “really fit users’ expectations” and “follow [the] form and function of [the] dashboard.”
Mayer also said there’s an opportunity for Yahoo to grow its search business through integration with Tumblr and for audience data from Tumblr to inform the content people see on Yahoo — i.e., if you like fashion on Tumblr, you can expect to see more fashion-related content in your Yahoo news stream.
How will Yahoo justify that $1.1 billion price tag? Ken Goldman, Yahoo’s chief financial officer, said he expects to see “relatively modest revenues” from Tumblr in the second half of the year, but that Tumblr should “materially contribute to revenues” in 2014 and beyond. Goldman noted that the deal was almost all in cash, minus a “small amount of stock directly tied to David Karp, [Tumblr’s] founder.”
Mayer stressed that Tumblr will continue to operate as an independent company. It will retain all employees and won’t even put the Yahoo logo on Tumblr’s site. Tumblr will benefit from Yahoo’s backing of technology and resources, which will allow the company to “innovate and release products much faster than ever before” as well as hire a “number of engineers and ad sales personnel,” she said.
“[We] need to Tumblr to keep what they’re doing,” Mayer said.
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