Tumblr Business Model – How Does It Makes Money?

Tumblr is a microblogging platform founded by David Karp in 2007. The idea of Tumblr is to provide a platform to its users where they can discover new avenues and bond over things that they love with people around the world. The founder of Tumblr, David Karp, waited for an entire year before deciding to make his own social networking website.

He waited for the established blogging platforms to introduce tumblelogging. However, that never happened and, hence, Karp came up with Tumblr. The Tumblr business model has an interesting bit of detail to it. It follows a rather obscure discourse when it comes to generating revenue. We will talk more about its revenue model in the later paragraphs.

The microblogging social networking website has a very specific kind of following. The ability to post high resolution images, gifs, videos and text has attracted a lot of content creators to Tumblr. Tumblr had over 475 million blogs in August 2019. During January 2016, the website recorded over 500 million monthly visitors on their social networking website. However, this number has dropped to 400 million monthly visitors by August 2019.

Tumblr and Acquisitions

Tumblr has seen a bunch of acquisitions in its existence of 13 years. Yahoo had acquired Tumblr for $1.1 billion on May 20, 2013. Many of the users were not pleased with this decision. However, the deal followed through. This deal allowed David Karp to stay on board as the CEO of the company.

tumblr business model

Yahoo made the acquisition in hopes of making a fortune through targeted advertisements. Sadly, things did not go as planned for Yahoo. The sale goals were not met and Yahoo saw great losses. This led to Yahoo writing off $712 million of Tumblr’ value in 2016.

Verizon bought Yahoo in June 2017. The new owners placed Tumblr and Yahoo under its Oath subsidiary. Karp announced in November of the same year that he will be leaving the company at the end of the year. Jeff D’Onofrio took charge of the company with Karp’s exit.

Pornhub’s attempt to acquire the Tumblr business model

Tumblr continued to struggle under the new management of Verizon. The social networking site had seen a 30% decline in use traffic since December 2019 due to the stricter content policies enforced on the users. The content policies put heavier restrictions on adult content.

A study from TechCrunch reported that in 2013 that 22% of all the send and received traffic of Tumblr is classified as pornography. Moreover, about 17% of the blogs on Tumblr had pornographic content. Hence, the heavier restrictions on adult content saw a dip in the page visits.

tumblr business model

Verizon considered selling Tumblr after a bad run since the purchase of the company. Following this news, Pornhub’s vice president offered to buy the micro-blogging platform and remove the strict content policies.

However, a deal never materialized and Tumblr was then sold to Automattic, an operator of WordPress. It was reported that Tumblr was acquired for less than $3 million. This was a huge decrease in the company’s net worth.

What is the Tumblr Business Model?

Tumblr allows its users to create and share blogs. Moreover, they can like and comment on different blogs. They can also follow blogs that interest them. Tumblr is also used by the likes of Taylor Swift, Lady Gaga, Zayn, John Mayer and Zooey Deschanel.

Each user has a ‘dashboard’ that works as a main page. The dashboard contains all the latest updates from the blogs that the user follows. Tumblr allows is users to be creative with their dashboards. They can customize it to their own liking. Unlike any other social networking platforms, Tumblr allows its users to use HTML and CSS to change the appearance of the blog. This level of control is not leveraged by any other website.

tumblr business model

The dashboard is very similar to the timeline in Facebook, and news feed in Twitter and Instagram. Users can schedule posts and make their blogs private. In November 2015, Tumblr added an instant messaging feature to their website.

How Do They Make Money?

Tumblr has a very simple revenue model. They have stuck to it ever since the inception of the site. Most of the revenue is generated through targeted advertisements that are placed around the website. Let’s dive in deeper to learn more about it.

Targeted advertisements

Like most social networking platforms, Tumblr makes money through advertisements as well. Tumblr has targeted ads to provide better user experience to the many people who use this platform. User dashboard. Hence, Tumblr likes to call them sponsored post.

The ads are highly specific to the usage of the blogger. For example, people who follow blogs related to makeup will only see makeup ads. Same goes for other kinds of ads. The idea is to show the ad to the relevant audience. These kinds of ads are better known as in-stream ads.

These ads are more likely to be clicked because they ae disguised as a normal post. This also increases the click rate on the ad as most sidebar ads are often ignored.

How Do Sponsored Apps Help the Tumblr Business Model?

Sponsored apps are advertisements that are about different apps that are available on the App Store or the Google Play Store. These ads are targeted too, but they are shown to a wider range of audience.

tumblr business model

Most of the ads consist of links to various mobile games or apps for your phone. You are redirected to the download page when you click or tap on an ad.

Sponsored Day

tumblr business model

Tumblr allows the companies to own the entire platform for a day to run advertisements. The company is featured on the homepage, the dashboard of users, and on the explore section across the site.

Snapchat uses a similar type of advertising as well. Moreover, you can learn more about Snapchat’s business model here.

Premium Themes and Post Promotion for Users

tumblr business model

Tumblr has a marketplace where users can buy and sell different themes for their dashboards. They make money through the marketplace in return. Lastly, users can pay Tumblr to promote their posts as well. A good feature for aspiring content creators.

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