Yahoo has started selling Tumblr ads through Facebook’s ad network to improve sales. Tumblr was bought by Yahoo three years ago for $1.1 billion. But the social network is in such a bad shape. Tumblr is having a tough time getting brands and companies to purchase its ads. The company has resulted in relying on Yahoo’s traditional banner ads and Facebook’s ad network to bolster sales and stay in business. Is it not desperate using a rival to make sales?
Yahoo’s CEO, Marissa Mayer confirmed that by the end of the second quarter of 2016, Tumblr ads were being sold through Facebook’s Audience Network ad network. Yahoo had remained silent about the ad deal between Facebook and Tumblr. Reports of the possibility of such a deal had been going round as early as March 2016, as Tumblr was struggling to sell as little as 15% of its available ads.
On Monday, during Yahoo’s earnings call, Mayer said that since Tumblr supply is growing so quickly, demand is getting outpaced resulting in monetization shortfall. Mayer seems to be suggesting that the Tumblr struggles are not caused by advertiser’s unwillingness to purchase its ads. According to them, advertisers are not willing to pay a high price for the ads. “The ad load on Tumblr is suitable. We only need to increase the demand,” Mayer added.
But Yahoo’s efforts to increase Tumblr demand are questionable. The company is growing demand for other products expecting that Tumblr demand will increase. Yahoo should stop treating Tumblr as a commodity. Tumblr is now a social network where advertisers can put ads that they can put on any other website.
Facebook found a way to offload the numerous ads by sending them on other sites, through the ad network. Ad network allows Facebook to continue selling its ads without cluttering the news feeds of users. Facebook does not permit advertisers to buy its ad network exclusively. Ads on ad network are in one way or another similar to the standard Facebook ads. The main difference is that ads on ad network will not appear on Facebook. The ads still appear to the Facebook audience and are sold at the regular Facebook ads rates, explaining why Yahoo turned to the ad network, where they will have to give Facebook 30% of revenue generated through their ads. The deal also requires Yahoo to give Facebook the connection to their advertisers.
The Facebook ad network is not the only avenue Yahoo is using to boost Tumblr ad sales. Tumblr ads are still available on Tumblr. Yahoo is also using the ‘native’ Gemini ads and the standard banner ads, famous for their large rectangular shape.
Tumblr was not supposed to use these desperate measures to remain significant. But maybe we should not be so surprised that the social network is doing so poorly. To start with, its parent company, Yahoo, has been struggling for quite some time now. Tumblr failed to reach revenue goals last year. The value of the company has significantly decreased in the past three years. Yahoo may have miscalculated when buying this social network.
