Yahoo acquired blogging platform Tumblr earlier this week for $1.1 billion.
But Tumblr is actually worth way more than that to Yahoo, Ben Thompson, a partner marketing manager at Microsoft, writes on his blog.
That’s because Tumblr can help Yahoo increase its advertising revenue in three key ways:
- Selling more ads: Yahoo could easily fill Tumblr’s 120 million daily impressions with ads.
- Selling more effective ads: Social networks are fueling a new type of native advertising that is far less obtrusive. Since Tumblr is focused on native advertising, Yahoo is now in a better position to expand its advertising offerings.
- Selling better targeted ads: Yahoo will be able to better target people across the web thanks to Tumblr. The blogs people follow on Tumblr are highly indicative of their interests. With Yahoo becoming the official host of Tumblr blogs, the company will get access to all that information. “More importantly, Tumblr is mobile, and mobile is an information goldmine (interestingly, the Tumblr app does not currently use location services; look for a new “feature” update soon).”