
Tumblr’s stumbles under Yahoo - ikeboy
http://mashable.com/2016/06/15/how-yahoo-derailed-tumblr/
======
gnicholas
Their ad strategy sure did suck. I know this because I really wanted to
advertise on Tumblr since many of their users were already posting about my
startup and driving tons of traffic (tens of thousands of page views, from
posts with 100k+ notes) to my website.

I contacted their ad team and was told the minimum ad buy was $25k. I
explained the situation and said that given the popularity of our product
among the Tumblr community, I had no doubt we could find a revenue-positive
way to advertise on Tumblr, but that we couldn't commit to $25k sight-unseen.
I never heard back from them.

Considering how easy it is to advertise on Google or FB with just a couple
bucks, I was shocked that Tumblr is so inflexible. I guess it's not surprising
they couldn't get to $100M in ad revenue, since they'll only talk to companies
that can afford $25k experiments.

~~~
shostack
Not diminishing your situation, but respectfully, you likely weren't the
target customer-base for their ad sales team at that stage of the game. Sounds
like your budget was too low, and you're a direct response advertiser (from
the "revenue-positive" comment). That $25k min. spend is a sales qualifier and
looks like it was successful in filtering you out in favor of advertisers who
don't bat an eye at testing something new for $25k sight-unseen.

With big media properties that are being cleaned up, a lot of that early focus
is typically on big brands who are doing large branding efforts that have cool
and sexy creative and are super customized to the platform. They want to reach
lots of people, and the property in turn wants to leverage it as a large case
study to attract other brand advertisers.

What you were looking for would not help meet their objectives because your
budget was likely too small, and because they are a new display-driven
property, they don't want advertisers focused on performance. Why? Well, most
performance advertisers are not super savvy with how they look at display
performance, and would be looking at it from a last click measurement
standpoint where it would almost certainly bomb (like most display, social,
etc.). Big brands doing branding plays are looking for reach and engagement
(or post-impression performance metrics in some cases). This is better for
Tumblr for purposes of building case studies and selling in to other big
brands, because big brands tend to not care as much about overpriced CPMs,
which means more margin for Tumblr.

Again, down the line it might have made sense that you could make a lot of
money for your brand and might have been a good fit, but realistically, you
just weren't their target. Same reason FB weeded out all the crappy affiliate
ads to the best of their ability and started pushing big brands for
engagement-based stuff.

~~~
daveguy
> That $25k min. spend is a sales qualifier and looks like it was successful
> in filtering you out...

This sounds like an effective way for any company dependent on sales to fail.
Especially online advertising sales where your incremental cost is
approximately zero.

There should be a term for management that makes this mistake.

~~~
shostack
I disagree entirely. Particularly for a big display platform like Tumblr, that
had a reputation for tons of porn and generally low-quality impressions, big
companies need to see other big companies take the risk and do cool branding
stuff that gets talked about. That takes investment, and means that you need
to focus all of your business efforts in attracting that target, and then
making sure they are successful.

With small budget direct response advertisers, all too often you get people
who promise they will spend more if it is profitable, but because they don't
know how to properly value display (see my last click comment) they won't see
last click success, and will thus not be a repeat advertiser. Beyond that,
they will also contribute to spreading the word that Tumblr is not a quality
inventory source, which could kill them before they had a chance to really
shine.

If I'm trying to grow ad sales on a property as large as Tumblr with the
reputation it had, the first thing I'm going to do is make it clear that the
focus is first and foremost on big brands and not the little guy. That's what
brings in the dollars, not the latter. The little guys come in once you are
already at scale with proven success for big brands.

Once that is successful with your limited sales resources, then and only then
do you create a self-serve platform for small direct response advertisers with
minimal 1:1 contact (ala AdWords, Bing Ads, etc.).

You need to think of the long game and think of where you would prioritize
your resources. Would you rather get a small inconsistent cashflow of people
who are likely to talk crap about your inventory because they don't know how
to properly measure it if they don't see a positive ROI after spending a
couple grand? Or would you rather focus all your efforts on big brands who
know what they are doing, have the budget to do highly visible tests, and
aren't afraid to "waste" 10's of thousands of dollars testing something new
that might not work out?

------
ivraatiems
This article wholly ignores the rampant technical problems with Tumblr and the
way that every "fix" for them makes the platform worse. Whether it's removing
the ability to post reply chains, the completely broken Web and mobile
interfaces, the haphazard rollout of new features, the sudden and unhelpful
modifications to the search function's behavior, or the continuous useless
pushes for people who are just reading blogs to instead make a Tumblr of their
own, the site is far, far off track from where it should be development-wise.
Yeah, ads are annoying, and I can't imagine Yahoo has helped matters, but I
think the feelings of Tumblr's user base on how it's being modified are a
large contributing factor in its decline.

Another factor is the failure of Tumblr's staff to appreciate the diversity of
ways Tumblr can be used: as a picture blog, as a server status log, as a way
of communicating person to person, as a way of communicating person to
corporation, as a way of creating funny writing projects or online
roleplaying, or just as a content aggregator. All of these are valuable uses
of the platform. Not all of them are ever accepted or catered to, in fact,
most of them are ignored.

I'd like to see more on why Tumblr's dev team does what it does than on why
its ads team sucks.

~~~
Grue3
This comment is just plain false. Pretty much every feature has been
objectively improved since Yahoo acquisition.

\- search is actually usable now, was completely useless before acquisition

\- new messaging features are better than stuff they had before

\- rich text editor better than the one they had before (except if you want to
edit in HTML or Markdown in which case it completely sucks now, but very few
people probably post in HTML or Markdown)

\- replies, I have hardly ever seen them used before they were removed. in any
case, the new implementation is much better

\- should I even mention the freaking video player?

Of course the users will complain, but I mean this is Tumblr, the userbase
will complain about everything.

~~~
ivraatiems
You didn't address most of the items I listed, but I will note for fairness'
sake that as I said, I'm a former user. I left in November or so. I've heard
good things about messaging, but not anything else you mention.

Replies were HEAVILY used by my part of the Tumblr community, and the changes
to them really screwed things up for us. Like I said, lots of use cases for
the site.

I certainly don't feel on the whole that tumblr was better when I stopped
using it than it was when I started. Even if that is true now, it wasn't true
for a long time, so my argument remains the same: its decline is due to
inadequate tech work for a long period of time.

------
rgbrenner
Yahoo derailed Tumblr? Ok, sure.

Just remember where it was when Yahoo acquired it.. $13m in revenue and $25m
in expenses for 2012 (net loss of $12m for the year). With $125m raised, and
$114m of debt on the books.

Yahoo acquired them just a few months after they announced these results for
2012.

It's easy to blame Yahoo for Tumblr's problems.. but Tumblr wasn't Twitter or
Instagram. It was a tiny business (in comparison).. that without Yahoo very
well could have been out of business by now.

[http://www.businessinsider.com/heres-tumblrs-total-
revenue-f...](http://www.businessinsider.com/heres-tumblrs-total-revenue-
for-2012-and-how-it-will-make-a-profit-in-2013-2013-1)

~~~
niftich
Context is important. Tumblr had a lot of porn blogs, sure, but most people on
it were 15-25-year-olds running personal blogs, interest blogs, and building
communities. It was essentially the new Livejournal, but with Twitter-style
reblogs.

Yahoo knew this, and wanted this demographic for their ad ecosystem. They
often thought of themselves as a 'media company', and they liked the creative
aspects of the community. They also, wisely, knew that Tumblr users would
never accept being forced into using a Yahoo account, so they had to keep the
userbases separate.

But this meant they couldn't use Tumblr to build Yahoo's social presence and
its brand. They'd harvest some analytics, display some very loosely targeted
ads to people highly averse to ads, but that mercantilist relationship was all
was to be. In that light, they clearly overspent.

------
fideloper
Gosh the writing is _so_ biased I couldn't finish the article.

Stating something as fact (oh, a source disputed this), artful use of
connotation ("a yahoo source played it off..."), and lastly (where I stopped
reading), calling the founder of Tumblr s "20-something". You don't get to
call a 29 year old a "20-something".

Feels overly sensationalized, even if yahoo is where start ups go to die.

~~~
galistoca
What would you call him then? 30-something?

~~~
dopamean
He's pre-30.

~~~
selimthegrim
I feel like pre-30 valuation is the new company metric in SV.

------
davidu
I love Tumblr, but this article is a bit distorted from reality.

Tumblr was failing to execute on the revenue side of their business, both
before their acquisition, and then after.

At some point, Tumblr had to try and become a business and not just a website.

This article points blame at Marissa, but shouldn't it really be pointing at
David, or a team of leaders?

~~~
Infinitesimus
I agree with the sentiment that the article reads as if "This is Yahoo's
fault" \- not to say they didn't play a role as the parent company. Bottom
line here is that Tumblr (with or without Yahoo) failed to monetize their
platform.

This line stuck out to me as very true reflection of what the Valley sometimes
looks like:

> Tumblr’s stumbles under Yahoo may go down as a cautionary tale, both for the
> perils of a large corporation buying a hot startup and for Silicon Valley’s
> belief that any social network reaching hundreds of millions of people will
> inevitably generate boatloads of cash one day.

There was talk of "We'll make it an advertising platform" but did anyone
really ask the Tumblr team "How" ? (I'd love to hear info from any insiders on
HN)

Makes me wonder how many times a day the execs at Facebook wonder how they can
ever monetize expensive companies like Whatsapp.

~~~
rm_-rf_slash
I suspect purchases such as whatsapp to Facebook were less about opening up
new revenue streams, and more about locking in potential competitors.

Not everybody uses their Facebook account but they may be more prolific on
Instagram. They might not like being constantly monitored by Facebook
Messenger but even with WhatsApp's end-to-end encryption, Facebook is still
provided with valuable metadata, and the more diverse data sources, the more
metadata resembles regular, easily interpretable data.

It's like Microsoft buying LinkedIn: the market was clearly bearish on the
company, but a tech Titan like Microsoft has a lot to gain by keeping its
finger on the pulse of potential hires around the world - with a crucial head-
start before headhunters can find star performers.

------
lkrubner
Mergers are hard, and "big company buys small company and derails it" is a
common story, in every industry.

Some historians of the automobile industry (Paul Ingrassia) suggest that
Oldsmobile would have gone much further if it had remained an independent
company. Wikipedia points out it was the #1 car company, shortly before it was
bought:

"In 1901, the company produced 425 cars, making it the first high-volume
gasoline-powered automobile manufacturer. (Electric car manufacturers such as
Columbia Electric and steam powered car manufacturers such as Locomobile had
higher volumes a few years earlier). Oldsmobile became the top selling car
company in the United States for a few years around 1903-4... General Motors
purchased the company in 1908."

[https://en.wikipedia.org/wiki/Oldsmobile](https://en.wikipedia.org/wiki/Oldsmobile)

John F. Love points out that in mid 1960s Burger King was building twice as
many restaurants as McDonalds, and was on track to surpass McDonalds by the
end of the 60s. At that time, Burger King had very smart management. However,
Burger King was then bought by Hormel, who regarded it as simply a place to
dump surplus beef that couldn't be sold through other channels. And that is
why McDonalds is the #1 burger company.

The software industry is full of such stories. Roomkey.com (it's pre-purchase
name was Hotelicopter) might have transformed the hotel industry, but it was
bought by a joint venture of Choice Hotels, Hilton Worldwide, Hyatt Hotels
Corporation, InterContinental Hotels Group, Marriott International, and
Wyndham Worldwide. This joint venture regards Roomkey merely as a bargaining
chip to get better rates from Expedia ("Give us better rates or we will invest
more in Roomkey".)

I could try to list all the innovative startups that Cisco has bought,
cannibalized, and then discarded, but it would take me all day.

Mergers are the main way that innovation is destroyed in our society. Over and
over again small startups are bought, and then killed by the different needs
of the new owners.

~~~
seanp2k2
I don't want to be a negative nancy here, but does anyone have any examples,
preferably in the past 10 years, where a company with cool tech was acquired
and did even better because of the acquisition? A company which really thrived
and wouldn't have without being acquired? Things like Nest make me cynical
that the vast majority of acquisitions end up destroying all the value created
before the acquisition by the acquiree.

Edit: Android might be an example acquisition success story.

~~~
niftich
Android, Youtube, DoubleClick, Summize (to Twitter) [1], Instagram, WhatsApp

[1] [http://www.businessinsider.com/2008/7/twitter-buys-
summize-f...](http://www.businessinsider.com/2008/7/twitter-buys-summize-for-
about-15m-stock-and-cash)

------
jwebb99
> Some knew the name, but they were hoping to be bought by a trendier tech
> company...

It didn't occur to me that millennials could be oblivious to the existence of
Yahoo. (Afterall, millions of people still use Yahoo Mail, Flickr, etc.)

> Karp, a coder at heart, is described by colleagues as “openly hostile” to
> traditional advertising.

I suspect Tumblr users, much like Reddiors, are allergic to advertisements.

> Traditional marketers... were also skittish about some of the raunchier
> user-generated content on Tumblr.

No shit. In many respects, Tumblr is essentially a bootleg porn site. From Day
One, people have cited Tumblr's reliance on "adult content" as a major problem
for Yahoo. I thought the would just ban adult content, but then I realized
that they can't because they would lose a significant chunk of their userbase.

------
daniellermm
I said it on the day of the acquisition and I'll say it again: Tumblr is the
geocities of 2014. Tumblr wasn't even a good company before the acquisition.

~~~
jacquesm
That means we can expect a shut-down any moment now, given that that's what
Yahoo! did to the original Geocities.

~~~
reality_czech
We should get to work right away building an archive. Gotta do it now, before
the shutdown hits! We can call it "Bumblr," and it will memorialize all the
worthwhile commentary that was ever made on Tumblr. (This should be a megabyte
or two of text that we can upload to mega.com.) On the other hand, the Tumblr
archive for porn will be called "Fumblr" and it will be hosted in Brazil.

------
tn13
Always loved Tumblr as a porn site and I am not kidding. I found Tumblr's porn
blog far excellent in quality than was ad infested, pop-up opening porn
websites.

------
dandare
Is it just me or is the article desperately trying to find examples of how
Yahoo hurt Tumblr only to come up with several trivial gaffes? I once worked
in a company damaged by acquisition and it looked nothing like this. Tumblr
simply didn't become the exceptional miracle some hoped for - and that is it.

------
relaxatorium
I wonder how much the two switches in ad teams correlate to the weird period
of time when the ads on Tumblr were about 100% for a weird choose your own
adventure cartoon thing?

------
dang
Several users have complained about this article being overly biased, so we've
replaced the one bit of it we can (its title on HN) with a slightly more
neutral phrase from the text.

------
hugh4life
My issue with tumblr is that the search interface for it is awful and
google/bing miss a lot of posts.

------
douglance
Tumblr deserves it. The format encourages one-up-manship that leads toward
every escalating victimization and identity crises in its users.

