Yahoo eyeing Tumblr in $1bn grab for “cool” demographic insiders claim

Yahoo is in talks to acquire Tumblr, with a potential deal worth as much as $1bn for the social blogging site, according to insider whispers. The acquisition would give Yahoo a vital footprint in the youth demographic the company currently lacks, sources tell AllThingsD and Adweek, in addition to giving a new outlet for brand advertising.

Tumblr has become the darling of the youth blog market, with its straightforward reblogging system and easy page customization making it both immediate and addictive. The site has found particular favor for those sharing photos and videos, with Tumblr claiming to have 107.8m blogs comprising 50.6bn posts.

However, the site has also struggled to manage the growing amount of adult content that is shared and re-shared, and has been criticized for relying on an opt-out policy for blogs with such themes to remove themselves from search results where underage users might see that content. Back in January, the official Tumblr app for iOS was updated with a 17+ age rating, in a move that was seen to be pre-emptively guarding against rejection from Apple over in-app content concerns.

Yahoo can apparently see beyond all that, the sources suggest, and the site’s fledgling use of advertising – predominantly inserting sponsored content into the main dashboard as users scroll through content from blogs they subscribe to – is also seen as promising. Last year, Tumblr suggested it expected to see advertising revenues in the order of $100m in 2013.

That could be the value Yahoo brings to the deal, wielding a much larger, established advertising team that could more thoroughly monetize Tumblr’s content. How that would sit with existing users is unclear at this stage; previous changes to the site have met with no small amount of resistance. Yahoo has a mixed track-record in how it handles acquisitions, too; its most recent three purchases were instantly shut down, something which could be a cause for concern for avid Tumblr users.

The Tumblr negotiations are described as “fluid” though at least one source suggested that a final agreement could be inked as soon as this weekend. That might not amount to a full acquisition, however; other possibilities include a close partnership between the two, as Yahoo attempts to duck under Tumblr’s “cool halo” and increase its userbase among the 18-24 demographic.