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Why Tumblr is Worth $1.1 Billion To Yahoo

Over the weekend, Yahoo CEO Marissa Mayer and Tumblr CEO David Karp reached a deal for Yahoo to buy the blog platform for $1.1 billion in cash.

With the rumor mill working on overdrive, the question arose: Is Tumblr really worth $1.1 billion?

That’s more than Facebook paid for Instagram in 2012, and almost as much as Google paid for YouTube in 2006…but should Tumblr be in the same ballpark?


Tumblr purchase compared to Instagram and Youtube

Tumblr has, by far, a higher number of accounts than either Instagram or YouTube did  at time of purchase, but how do they stack up against visits? Instagram was limited to users with accounts, but YouTube has always thrived on their high traffic more than it has on account creation.

Visitors3Admittedly, 2006 YouTube traffic was a far cry from 2013 traffic. YouTube now averages over 1 billion monthly unique visitors. But even in 2006, their 100 Million monthly video views merited a purchase of $1.65 billion. Tumblr averages 300 million unique visits each month. Time will tell if Yahoo can help grow that audience the way Google has helped grow YouTube’s. On the flip side, will Yahoo help lend some legitimacy to Tumblr’s platform?

When Facebook bought Instagram, the photo-sharing app had less than 40 Interbrand 100 companies using the network. A year later, that number has grown to 67. Tumblr’s story is starting the same way, with only 30 Interbrand companies recognizing the potential of the network, but without the photo-specific and mobile focus that Instagram has, Tumblr has the potential to dwarf that figure in the near future. Now that Yahoo has purchased the network, we’ll be interested to see how their brand adoption grows.

We’ll be tracking Tumblr’s brand adoption, network growth, and overall development over the next several months, and look forward to watching how this bolsters the platform’s legitimacy.

For more insight, and to track Tumblr’s progress along with us, follow @simplymeasured on Twitter.

Kevin Shively

I lead marketing for Simply Measured. Recovering journalist. My team is embarrassed of my hilarious jokes. Firm believer that the best marketers are the best storytellers and the best storytellers use the best data.

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