May 21, 2013, 11:56 AM

Yahoo jumps further into social media marketing

Its acquisition of Tumblr could lead to more ads on the blogging site.

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Yahoo Inc. said Monday it will pay about $1.1 billion primarily in cash to acquire Tumblr Inc., a popular web site for distributing and sharing blog posts that, Yahoo says, attracts more than 300 million unique monthly visitors. But the deal raises the question of how Yahoo will be able to turn Tumblr’s followers, who now see little advertising on Tumblr.com, into a base for generating online advertising revenue, at least one expert says.

The two companies say they will work together to combine Yahoo’s web search and personalization technology with Tumblr’s network of blogs. Tumblr will use Yahoo’s technology to help its users discover bloggers and content developers that suit their interests, the companies say. In turn, Yahoo and Tumblr say they will develop new online advertising programs to help connect marketers with Tumblr’s growing base of users.

To be sure, Yahoo’s acquiring a huge new base of online visitors raises the potential for an effective new marketing channel, says Zachary Reiss-Davis, an analyst at Forrester Research Inc.  “Marketers are seeking new channels to reach audiences which are increasingly tuning out traditional online advertising,” he says. “Yahoo's stated intention to create a new type of social ad unit on Tumblr provides an opportunity for marketers to reach their target audiences in a new channel, with a new type of advertising.”

He adds, however, that Yahoo and Tumblr will have to figure out how to devise new advertising programs without turning off Tumblr’s users, who are accustomed to little advertising on Tumblr. The social media company operates Tumblr Radar, which lets advertisers sponsor content Tumblr showcases from what its staff considers the most interesting content posted to its network, but Tumblr users are not accustomed to seeing other forms of ads among Tumblr’s content.

“The big challenge for Yahoo will be determining how to create that social advertising without alienating the core Tumblr users,” Reiss-Davis says. Yahoo CEO Marissa Mayer seemed to acknowledge the skepticism among Tumblr users when she posted her on blog on Tumblr about the acquisition, stating flatly: “We promise not to screw it up.”

Mayer says she expects Yahoo to be able to take advantage of Tumblr’s fast growth to increase Yahoo’s number of unique monthly visitors by 50% to more than 1 billion. New York-based Tumblr, which has 178 employees, claims to have amassed more than 50 billion blog posts, and says each day it adds another 75 million or so posts and 120,000 new users who sign up to post blogs.

Social media marketing will be addressed in several sessions at the Internet Retailer Conference & Exhibition 2013 in Chicago  June 4 – 7, including the session “Social media 101 for small retailers,” with a presentation by Carrie Gouldin, web community manager, ThinkGeek. ThinkGeek is No. 180 in the Internet Retailer Top 500.

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