Tumblr, which is owned by the struggling Yahoo, has just confirmed that they have had to turn to the Facebook ad network in order to fill their inventory of ads.
Yahoo bought Tumblr for $1.1 billion about three years ago, and while the site itself has grown significantly, the demand for its ads has lagged behind.
Marissa Mayer, the CEO of Yahoo, confirmed that since the end of Q2 2016 Yahoo has been selling Tumblr ads using the Facebook Audience Network.
In the call, Mayer said, “Our supply [on Tumblr], because it’s growing so quickly, is outpacing demand and is causing this monetization shortfall.”
The move really makes sense because Facebook has excessive advertisers, and Yahoo has too much ad space. Other than the porn side of Tumblr (which may very well be most of it), most of the site can be used to display just about any type of ad, which also makes it a good fit for Facebook.
Of course, Facebook will be getting a 30% cut of all the ad revenue generated this way, which has to be hard for Yahoo to accept, but 70% revenue is better than 0%.
During the call, Yahoo also reduced the value of Tumblr by $482 million, leaving it valued at an estimated $278 million, which is a fraction of what Yahoo paid for it just a few years ago.
So, to sum it up, the earnings call from Yahoo is just more bad news for the iconic tech company. It is unfortunate to see one of the pioneering web companies falling so quickly, but that is the nature of the industry. Many people expect Yahoo will try to sell off different parts of their company, including Tumblr, in the near future.
