Verizon correcting the mistakes of yesteryear with Tumblr sale

There are good acquisitions and bad acquisitions, and then there was the prolonged saga with Verizon acquiring Yahoo’s media assets.

In 2017, Verizon decided it wanted to scrap with Google and Facebook to secure a slice of the lucrative online advertising bonanza. Its route to these riches was acquiring Yahoo’s media assets, an on-going saga was has led to little more than headaches for the telco. Now Verizon has announced it will get rid of one of the adopted problem children.

Financials of the deal have not been announced, though WordPress owner Automattic will acquire Tumblr.

“Tumblr is one of the Web’s most iconic brands,” said Automattic CEO Matt Mullenweg. “It is an essential venue to share new ideas, cultures and experiences, helping millions create and build communities around their shared interests. We are excited to add it to our lineup, which already includes WordPress.com, WooCommerce, Jetpack, Simplenote, Longreads, and more.”

Perhaps one of the biggest problems with Tumblr is figuring out what to do with it. In its own right, Tumblr is a very successful platform, home to 475 million blogs, though translating such potential is often a difficult task, requiring forward- and out-of-the-box thinking. Automattic looks to be a much more suited business to realise this ambition than the traditional telco.

“Tumblr is a marquee brand that has started movements, allowed for true identities to blossom and become home to many creative communities and fandoms,” said Verizon Media CEO Guru Gowrappan.

“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.”

For Verizon, this is another chapter is a pretty miserable story so far. The entry into the media world started on shaky grounds with huge data leaks and hasn’t got much better. It does still own some very attractive titles, TechCrunch and Huffington Post for example, though in laying off 7% of staff last October as well as 15% of UK staff in January demonstrates the pain.

The telco has to make the media business work for it, it did make a $5 billion bet after all, but it has not been a simple quest to date.

Verizon continues quest to correct content car crash

The Verizon mission to conquer the content world has been anything but a smooth ride to date, and now it is reportedly searching for a buyer for Tumblr.

According to the Wall Street Journal, Verizon executives are on the search to offload the platform. The Verizon Media Group has been under considerable pressure in recent months, as the promise of value through content and diversification has eluded the telco.

Looking at the most recent earnings call, Verizon Media Group revenue was $1.8 billion, down 7.2% year-on-year for the quarter. Declines in desktop advertising were primarily blamed, with the dip continuing to more than offset growth in mobile and native advertising. Considering the effort the telco had to exert to acquire Yahoo, not to mention the headaches it had to endure, some might have hoped there would be more immediate value.

The last couple of months have seen Verizon attempt to make money from the mockery, with a particular focus on job cuts. In January, it was announced 7% of the media unit’s workforce, some 800 roles, would be sacrificed to the gods of profits, and now it seems Tumblr is being marshalled to the alter.

What is worth noting is this is a platform which has promise.

After being acquired by Yahoo during 2013 for $1.1 billion, Verizon inherited Tumblr through the much mangled $4.8 billion acquisition of Yahoo in 2017. Although some might struggle to understand what Tumblr does, the all-encompassing blogging platform currently has 465.4 million blogs and 172 billion posts.

Tumblr is a tricky one to understand what it actually does, but instead of trying to pigeon hole it into a definition perhaps the better approach would be to let it just be itself. Tumblr defines itself as a blank canvas, allowing users to post text, photos, GIFs, videos, live videos and audio, or pretty much anything the user wants to.

Perhaps this is why Verizon has struggled with the brand and presumably failing to realise the potential. Telcos generally cultivate traditional and relatively closed-minded cultures. With Tumblr just being itself, rather than fitting into a tidy tick-box exercise, Verizon may be struggling to communicate the value to customers or even devise an out-of-the-box business model to monetize it effectively.

This assessment is perhaps supported by where the media business has seen success. Financial news for example, or the delivery of sports content. These are not exactly complex business models to understand, more difficult to deliver however, as they are more functional. These are the areas CFO Matt Ellis was boasting about during the earnings call.

While there has not been any official commitment or denial to the rumours from Verizon so far, there does seem to be some appetite from the industry. According to Buzzfeed, Pornhub VP Corey Price is ‘extremely interested’ in potentially acquiring Tumblr, promising to re-discover the NSFW edge, one of the factors which drove the popularity of Tumblr during the early days.

The future of Tumblr might be a bit hazy for the moment, but one thing is clear. Verizon is mapping out a very effective usecase on how not to diversify into the content world.