By Alexander Schäfer on May 31st, 2013
Yahoo has made a business move that some feel will be its biggest challenge yet. With a blemished record as a start-up appropriator, Yahoo has assured the public that they won’t “mess it up” this time. Yahoo’s intentions are admirable; however, some feel that their hopes may be somewhat callow. The acquisition is expected to boost Yahoo’s users by 50% to over one-billion monthly visitors. It is estimated that 300-million will visit Tumblr and 700-million Yahoo. Just as conspicuous, Yahoo is hustling to recoup the “hip dynamic” it had previously and to convince investors that the deal is “tried and true,” and that a return on investment is definitely in the cards.
During a recent conference call, Yahoo CEO Marissa Mayer stressed Yahoo’s promise not to “put too many ingredients into the pot” as it were. She stated that Yahoo would leave Tumblr to its own devices as an independent entity. To ward off disparagement that Yahoo “royally screwed it up before” when it acquired Flickr, due to neglect from top management, Mayer reiterated that the vision is to have the success of Google’s acquirement of YouTube and eBay’s attainment of PayPal – ideal paradigms of how keeping companies sovereign can increase customers and profits. With this new venture, there will undoubtedly be challenges for Yahoo. If they can prove their mettle by conquering what lies ahead, only then can Yahoo join the ranks of the other Internet giants Google and eBay.
Most in the business of cyberspace acquisitions are well aware of Yahoo’s track record. The company relinquished GeoCities following a decade of tumult with its costly multi-billion dollar purchase, and Flickr, well, it “flickered out.” The premise is that a fresh executive team at Yahoo and a self-sufficient operations strategy will avert Tumblr’s demise. To achieve success, Yahoo must not become mesmerised by short-term revenue enticements, and centre on tactical, variable monetisation prospects.
Non-interference is vital to Yahoo’s potential with Tumblr, state the experts. Yahoo’s superb technical expertise will surely benefit Tumblr; however, the “new kid on the block” needs to be defensive of its creative barriers. The recent Facebook-Instagram deal is a pivotal exemplar of an independently governed attained company. It is yet to be established whether the deal has been profitable for Facebook; nonetheless, the integration has been advantageous for shareholders and users. Thus far, Instagram has not garnered a cent for its new owner. Though acting independently and developing updates at an acceptable rate, it is difficult to determine whether Instagram may have made the same accomplishment alone without any inference from Facebook! Yahoo must, therefore, endeavour to achieve the feat of equity between autonomy and transparent regulations amid the parent company and Tumblr.
In 2005, News Corp acquired developing social media network Myspace for a massive $580 million. When this did not prove successful, Myspace was sold for a mere $35 million. It was reported that Myspace lost its appeal and left for Facebook and Twitter. New Myspace owners Tim and Chris Vanderhook from Specific Media have stated they are attentive to the errors New Corps made with the social media site. The Vanderhooks are steadfast on re-establishing the “organic approach” with Myspace that made it so successful in the beginning; however, so far luck eludes them.
Observers sense that the identical scenario occurred with Yahoo and Flickr, a partnership that was ill-fated once an incursion of new users weakened the significance of the original community. It seems extremely challenging to promote autonomous growth while also providing and maintaining the attentiveness of the site’s central users. Nonetheless, this is something that Yahoo must attend to if its new acquisition shall flourish.
Technology experts believe that Yahoo is attaining the “hip type of technology” that individuals previously associated with the company. Targeting young users and top international companies, along with all ten of the largest movie studios, is a dynamic move by Yahoo, as both young consumers and global brands utilise Tumblr to endorse their products. Furthermore, Tumblr is beyond Yahoo in pursuing customers who use smartphones to view their sites. Over half of Tumblr’s users are utilising the mobile app and carry out a steady seven sessions each day, quoted Mayer, Yahoo’s CEO. Whatever the outcome, it is too late for Yahoo to turn back now. Perhaps lessons have been learned through their former acquisitions and Tumblr will put Yahoo back on top in the ever-revolving door of social media.