the Difficult Conundrum of Tumblr

the Difficult Conundrum of Tumblr
Most recently, Tumblr has struggled to maintain and grow its user base following last December's shift in policy that eliminated adult content. Neither Yahoo nor Verizon was adequately able to connect with Tumblr's user base and generate significant revenue from the platform. While Tumblr is undoubtedly popular, it still poses a dilemma for potential corporate buyers.

Key Challenges

Key Challenges
Tumblr’s main source of income is stream advertising, similar to how Facebook, Instagram, and Twitter make money. However, Tumblr’s users base is significantly smaller than any of its social media peers, making it less financially viable to base its business model on advertising alone. To compound the problem, users who do log in do so with an email address and are not required to provide the wealth of ad targeting information that Facebook requests from users. Although Tumblr does technically make money, the social media website has yet to show signs that its $1 billion price tag was worth it.

A Potential Return

David Karp claimed that Tumblr would have $100 million in revenue in 2013 and Yahoo swore that it would exceed $100 million in 2015. After missing both of those marks, market analysts have come to view Tumblr as an inconsequential business segment for Verizon and Oath. Tumblr has not released monthly active user counts since 2013, but according to a recent survey from research company Statista, approximately 43% of 18 to 24-year-olds use Tumblr at least once a month.

After the decision to ban adult content and Tumblr's subsequent loss of user base and traffic, the future for the company is unclear. If Verizon does succeed in finding a buyer, it's likely that some aspects of Tumblr will change under new ownership, potentially

Tumblr's Premium Themes Business

Users can also buy and sell premium blog themes for their pages on the Tumblr marketplace. A typical premium blog theme costs around $19 as of this writing.

Tumblr's Sponsored Day Business

Tumblr also offers a service it calls "Sponsored Day." According to the company, this service allows an advertiser to pin its logo and tagline to the top of the Tumblr dashboard for 24 hours and through the Explore page, ensuring enormous viewership by millions of Tumblr users.

Tumblr's Video Post Business

Tumblr's Video Post Business
Tumblr also displays advertisements called Tumblr Video Posts. Similar to Sponsored Posts, Sponsored Video Posts target users based on their lifestyle choices. These videos play on continuous loop and pop out of the Tumblr page when a user scrolls so that they can be viewed without interruption.

Tumblr's Sponsored Posts Business

Tumblr’s sponsored posts look identical to normal Tumblr posts, only they target users by parameters including gender, location, or interest. A sneaker company might place an ad targeting young adults who follow blogs about fashion or style, for example. These advertisements appear on users’ dashboards and are more likely to be clicked on than a sideboard ad because they are integrated into user content. Stream ads are now popular on other social media websites, including Facebook (FB), Instagram, and Twitter (TWTR). Additional "sponsored posts" are also located on the website's sidebar in the style of traditional advertisements.