Yahoo’s Tumblr acquisition fails to reclaim display ads market: eMarketer

Yahoo Inc. got some bad news today as an eMarketer survey shows it has failed to turn its Tumblr acquisition into a larger share of the display advertising market – and things are forecast to only get worse from here.

Tumblr, the social blogging platform Yahoo acquired about one year ago for $990 million, is continuing to grow its number of U.S.-based users, eMarketer says. The number of users reached 13.7 million in 2013 and is expected to reach 17.1 million by the end of this year. That’s projected to continue to grow to 24.2 million in 2018.

While that growth is good, the growth is slowing in terms of new users and is concentrated almost entirely in two age groups, according to eMarketer. The 18-to-24 and 25-to-34 demographics represent 52.2 per cent of Tumblr users today and that trend is expected to hold out until 2018. Worse yet, all those users aren’t converting into more display advertising business for Yahoo.

The web giant saw its overall display ad revenues slip by 7 per cent in Q2 of 2014 and eMarketer is forecasting it will continue to slip to 5.8 per cent by year’s end. By 2018 it’s being forecast to slip to 4.4 per cent of the market, overtaken by Twitter for third place overall. Facebook and Google are projected to continue dominating the market.

But there’s a silver lining in all this for Yahoo, according to eMarketer. Since the Tumblr user base is set up to act as an echo-chamber for sponsored content with reposting, the platform could maximize the value of each display ad by amplifying it across their network of users. Since the platform is mobile friendly, there’s opportunity to claim a stake in that display advertising battleground too.

For marketers that manage a display advertising budget, Yahoo’s slipping market share might represent a value buying opportunity. It could be that lower rates for buying impressions could lead to bargains for impressions across Tumblr’s network. Especially for marketers seeking those younger age demographics, it is worth considering the third-place market share holder and not putting all your advertising eggs in the Facebook and Google basket.

Brian Jackson
Brian Jackson
Editorial director of IT World Canada. Covering technology as it applies to business users. Multiple COPA award winner and now judge. Paddles a canoe as much as possible.

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