- Tumblr Tumbles From $1.1b to $3m
After years of poor revenue generation, Verizon has announced plans to sell Tumblr to Automattic Inc., the owner of WordPress.
Yahoo Inc., under Marissa Mayer, had acquired Tumblr for $1.1 billion in an effort to get into the social media space and enhance revenue generation following Caro Bartz departure. A similar move to Google’s Google Plus failed strategy.
In 2013, Tumblr was generating a paltry $13 million per year when Mayer paid $1.1 billion for it, raising concerns as to how the then CEO planned to up revenue enough to justify the acquisition.
Marissa Mayer, however, claimed she bought a high-traffic website with a poor monetization strategy.
Three years later, Yahoo announced its inability to increase sales on Tumblr and afterward wrote down $712 million of Tumblr’s value.
This was when Yahoo was struggling with data breach — over a billion emails and details stolen by suspected Russian hackers.
In 2017, Verizon acquired embattled Yahoo for $4.8 billion, far below $44.6 billion offer made by Microsoft Corporation in 2008.
Earlier this year, Verizon started exploring how to better monetize Tumblr after abandoning it for a whole year. The company soon discovered that Tumblr has movements that allow people to express their true identities, including porn.
“Tumblr is a marquee brand that has started movements, allowed for true identities to blossom and become home to many creative communities and fandoms,” Verizon Media CEO Guru Gowrappan said in a statement.
Uncomfortable with hosting adult content, Verizon announced a blanket ban in January. That move didn’t just drive away its huge users but also drove down its value to almost nothing.
With huge operational cost and poor revenue generation, Verizon had no choice but to let go after just two years.
“We are proud of what the team has accomplished and are happy to have found the perfect partner in Automattic, whose expertise and track record will unlock new and exciting possibilities for Tumblr and its users,” Gowrappan stated.
