Marissa Mayer eyes the youth market with Tumblr acquisition
Marissa Mayer is a woman on a mission to rejuvenate Yahoo, and to make it appealing to the youth market. Her recent series of acquisitions have infused young perspectives into the company, and have succeeded to a degree in rekindling user’s interest in the site. Her most recent, and also most expensive acquisition of the 100 million+ user strong micro-blogging site, Tumblr, is one of many risky moves being made in a bid to facilitate audience expansion and increase overall profits through advertising.
The youth market consists of those between the ages of 18-34, and is considered as being the most sought-after audience for businesses due to it’s paying potential, i.e. financial ability to respond to advertisements. A large part of Mayer’s desire to connect with the youth market involves bringing in profits for Yahoo via sales from advertisements which she hopes will come in from companies interested in connecting with her.
For those who are unaware of what Tumblr is, and are curious to know exactly what prompted Mayer to pay the huge sum of $1 billion to acquire it, here is some basic information. Tumblr is a micro-blogging and social networking site with an Alexa ranking of 32 [as of May 2013]. It allows users to create free accounts and post short blogs, and also allows them to follow the work of other users. With a 108 million blogs on its site by users who are under the age of 25, Tumblr is youth-oriented, and one of the most preferred websites for the youth to visit and use. This appears to be the primary reason for Mayer’s interest in acquiring it, regardless of the steep price.
Among the many expectations of this acquisition, are those of an increase in traffic to Yahoo’s website. The expectation stems from Tumblr’s own impressive statistics; it receives 300 million visitors per month, and boasts of 900 entries per second. Even if 10% of Tumblr users were to visit Yahoo and use it’s services that would mean an inflow, at minimum, of 30,000,000 visitors. From Tumblr’s perspective, it is also looking at increasing traffic from Yahoo’s existing user base, which equals approximately 700 million people. Also an advantage for Tumblr is the fact that it will be associated with the 4th most popular website in the world [as per Alexa rankings, Yahoo ranks 4th after Facebook, Google, and Youtube]. It is also predicted that Mayer will re-energize Flickr, a photo-sharing service, which was acquired in 2005 and then largely ignored. This is therefore, another possible win-win for both Yahoo and Tumblr.
Advertising and earnings from ads are also part of the plan for both Yahoo as well as Tumblr, although Mayer appears to be more enthusiastic about this idea than Tumblr founder, David Karp. The overall plan therefore, is to bring more young users to Yahoo, Tumblr being one of 12 youth-centric platforms [from her previous acquisitions and acqui-hires], and to present Yahoo as being with the new, hip crowd.
Mayer is one of the youngest CEOs to ever run a Fortune 500 company, and it is natural for her to share the vision of 26-year-old Karp, Tumblr founder. The fact that she has managed the acquisition so smoothly [the process took only 1 month], and has already proved herself capable of bringing in profits to Yahoo in barely 11 months, is testimony to her ability to reach out to and connect with a young market, and hopes are high for her to profit from this youth-centered venture, thereby pushing Yahoo to greater heights.