Yahoo acquired Tumblr back in 2013, but the relationship hasn’t been as profitable as both parties had thought. They did have a brief honeymoon where Yahoo was seeing revenue, but the network mainly failed. Most recently, Yahoo wrote the value of Tumblr as 20 percent – ouch.
To try to save their marriage, Yahoo is considering a deal with Facebook that would allow them to sell ads inside of Tumblr’s mobile app. The Facebook deal would involve sales through the social network’s Facebook Audience Network, a relatively new offering that allows advertisers who already work with the company to sell ads that also run outside the network on other sites.
Facebook Ads in Tumblr isn’t a bad idea. There are over 550 million monthly Tumblr users. They have an average of 120,000 signups every single day.
Brian Meert commented on the possibility of Facebook Ads in Tumblr for marketers, “If this goes through, it would give Facebook another large platform to run its targeted ads on, thus increasing the reach for advertisers trying to reach targeted users via the web.”
Yahoo already has a number of ad-sales deals with outside parties, including a three-year, search-related ad deal that it signed with Google last October. It also has a deal with Microsoft that allows Yahoo to share in the revenue for ads that run on Microsoft properties.
People have blamed Tumblr’s fail of generating revenue on founder David Karp’s dislike of advertising and revenue-boosting efforts. However, after the merger, Karp was talking about the potential for high-quality, magazine-style ads on Tumblr. For some reason, Yahoo and Tumblr haven’t come through for either of those options so Facebook looks like his best chance.
Yahoo had hoped to spin off its Alibaba holdings (worth an estimated $25 billion) into a separate entity, but has had to shelve those plans after failing to get approval from the IRS. Thus, the Facebook deal is probably looking like a really good deal to make some cash for themselves and save this merger from being a disaster.