In her now-famous tweet, Yahoo CEO Marissa Mayer promised not to "screw up" Tumblr. While it remains to be seen whether the site's users will soon be fleeing, Tumblr's advertising is a different story.
Simply put, there's not much to screw up at this point.
Partially, that's because the company's ad units are so new. But Tumblr faces other obstacles as well including an ambivalence towards advertising, a lack of metrics and a platform that lets you do lots of marketing outreach for free.
Tumblr introduced its ad program last May and was so conflicted about the decision that it couldn't quite bring itself to call the units "ads." (It preferred the term "sponsors.") CEO David Karp had also gone on record stating that Tumblr was "pretty opposed to advertising," a stance he later regretted.
After viewing advertising as a necessity, Karp's compromise was to be particular about the placement and quality of the advertising. The ads can only be found on the user dashboard rather than on the blogs themselves and Tumblr screens potential ads to avoid a "yucky big change" in the user experience.
As a result, despite Tumblr's huge reach — the platform claims 18 billion pageviews a month — the ads only brought in $13 million or possibly even less last year. Though it hoped to make $100 million on ads this year, the company was on track to make just $15 million this year, according to Referly CEO Danielle Morrill. To put that in perspective, consider that Facebook reported revenues of more than $5 billion in 2012. (Tumblr reps could not be reached for comment for this story.)
Beena Kalaiya, associate director, strategic insights and social media at media-buying firm Optimedia, says that Tumblr doesn't provide the sort of metrics that advertisers are used to. "The analytics are better than they used to be, but not robust enough," she says. "I'm hoping that Yahoo helps in that respect." Instead of letting advertisers target their buys based on demographics, Tumblr requires them to buy based on the target consumer's interest. "People who are used to buying that way are challenged," Kalaiya says.
Tumblr's other issue is one that plagued Facebook to a certain extent: The perceived inessential nature of advertising on the platform. General Motors, for instance, pulled its ads from Facebook in 2012 after it realized that it could communicate well enough with fans for free. (The company recently came back for a test program.)
In Tumblr's case, though Kalaiya notes that top-tier brands are on the platform, they aren't necessarily advertising. Tyler Fonda, strategy director at ad agency Gotham in New York, also notes that his client, Denny's has been having great success creating engagement on Tumblr, the brand hasn't yet bought any ads. "We make a lot of content and it works well there," he says. Fonda plans to buy some Tumblr ads in the near future.
If so, Denny's will be joining a few dozen Tumblr advertisers including Adidas, Pepsi, GE and ABC Family. The relative scarcity of advertisers is a blessing in disguise for Tumblr in one respect, says Kalaiya: The chances of having your ad run next to one of the many porn sites on the platform is low. "It's a concern, but Tumblr has done their best to assure advertiser that that won't happen," he says. "There's not that many [advertisers] on the site, so it's easier to manage that."
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