Yahoo is trying to dive in to the world of social media. The board of Yahoo announced Monday their plans to buy to the popular blogging service, Tumblr, for about $1.1 billion. The deal would mark the largest acquisition of a social networking company in years.
Yahoo’s chief executive, Marissa Mayer, is attempting to bring new life in to the company and appeal to a younger audience. The move to buy Tumblr is also a move to make up for the years Yahoo missed out on social media revolution.
The big question behind the purchase: Can Yahoo make money off of this acquisition? Tumblr was founded 6 years ago and has raised millions of dollars from big-name investors but the company has yet to prove that it can be profitable.
If the deal is accepted, Mayer will be faced with the challenge of managing the takeover of the blogging site. Yahoo’s track record for these kinds of purchases isn’t too great though. Yahoo’s previous purchases, such as the acquisition of Flickr for $35 million and GeoCities for $3.6 billion, have either been neglected within the company or shut down.
Since Mayer’s start as Yahoo’s CEO, she has purchased a string of tiny start-ups, in which most were aimed to help better Yahoo’s core products, such as mail, finance, sports, and their new mobile service. She aims to pick up other big name companies as well. Mayer has had conversations with other companies such as Foursquare, the app that let’s users find nearby restaurants and stores, and Hulu, the video streaming service.
With the latest acquisition, Tumblr brings something that Yahoo has been seeking out for a while now, a social networking site with a loyal following. The site features more than 100 million blogs, reaching 44 million people in the United States and 134 million around the globe. With this newly purchased site, Yahoo is hoping to gain back market shares previously lost to Google and Facebook after its share of digital ad revenue dropped from 15.5 percent to 8.4 percent last year.