14 DAY TRIAL // Yahoo is pretty sure that buying Tumblr was a great idea and has been sticking by its statement for the past year and a half. The company is certain now that Tumblr will generate more than $100 million (€79.14 million) in revenue in 2015, mostly thanks to the growing user base, as well as a successful introduction to sponsored advertising.
Many have thought that Tumblr was a waste of $1.1 billion (€840 million) for Yahoo considering the fact that it barely has any revenue. Mayer’s positive outlook is meant to give investors confidence in the company’s future and in the CEO’s choice of acquisitions.
Even at the time the two companies decided to sign the deal, it was obvious that Mayer had been banking not on Tumblr’s power to make lots of money, but rather on its audience – a younger group that Yahoo has been desperately trying to attract in the past few years.
The reasoning was that if Tumblr belonged to Yahoo, some of the members of the platform would go visiting Yahoo’s other properties. Whether that has happened or not hasn’t exactly been revealed so far, but it doesn’t exactly seem like a plan that would pan out 100 percent.
Mayer is now focusing more on the financial aspect of it all and said that the blogging platform would achieve “positive Ebitda” in 2015. That’s a measure of profitability that strips out taxes, depreciation and other measures, which indicates that the young company is on the right track to become stable.
Tumblr news, a surprise
Yahoo has largely been silent since the acquisition, choosing to not really address Tumblr’s situation at all. The fact that Yahoo has chosen to speak out about Tumblr’s financial prospect at all came as a surprise during the most recent earnings call.
Marissa Mayer has also added that over the past 15 months, Tumblr’s audience has grown 40 percent to 420 million users, which is an impressive number. The number of registered blogs has also grown quite a bit, nearly doubling to 206 million. This number includes logged-in users, but also people who land on one of the Tumblr blogs.
What’s even more important for a company that seeks to make money out of advertising is the fact that people linger a lot longer on Tumblr these days. They now spend an average 28 minutes in dashboard sessions, up from 22 minutes.
That’s an increase in both users and platform engagement, which is good news for the companies involved.