When a small impactful start-up is acquired by a sizeable market player, the inevitable questions of why and what for ensue. Yahoo did this on Monday when it announced the acquisition of Tumblr, for a staggering $1.1bn. The microblogging site, whilst a keen media player, has only posted revenues of $13m. So with motivations unlikely to be financial, this leaves us to look at Tumblr’s other key asset: Customers - which = DATA.
Data has quickly become the currency of the internet and the marriage of both social and interest data is a very powerful commodity. Being able to merge and stitch together data is something all organisations are increasingly looking for, as it brings genuine insight into audiences and their respective preferences. This level of understanding enables brands to market in a much more relevant and scaled fashion, something that can bring about an entire change in the marketing department's relationship to both their internal and external customer. So, in Yahoo's case, its recent focus on becoming a lifestyle business must be data driven and it’s this insight that they stand to gain through Tumblr.
Whilst this is a clear turning point in the direction of Yahoo’s business strategy, the wider impact is much more interesting with the acknowledgement that data, and the insight it generates, can transform organisations. It’s not the first time that this data land-grab has occurred. Let us not forget when Facebook bought Instagram for a cool billion dollars, with only 13 employees, Google acquired Wildfire, and Salesforce are integrating Buddymedia; the motivation was the same - access to data to effectively target consumers based on their interests, eliminating the need for clusterbomb marketing.
Monetising and creating the system to mine data for insight, is the direction in which marketing and media is headed. Today, online media has become a commodity and the data held on it is now the currency to trade. This is a powerful position for social currency traders and platform enablers, as they can unlock the potential held within brands. So applying a revenue model that intelligently connects content and the consumer, with a brand they want to be engaged with, at their convenience, is an impactful entity and one that large media players are moving towards.
Where the internet of old had more of a database function, the passage of time has shown that it is maturing into a playground where data can be readily shared and responded too. Gone are the days when content was consumed in a silo. Now it’s shared, openly and discussed at length with any numbers of audiences, globally. These conversations, coupled with a more connected approach to life and advances in technology have created a consumer shift, so powerful that brands need to realign their business thinking. Data means knowledge and that, complemented with a dynamic brand proposition can be transformational.
It will be interesting to see how Yahoo works with Tumblr to reposition itself over the coming months. Clearly Tumblr’s power lies within the insight it can provide and if this data is used wisely, we could see Yahoo returning to 'darling' status once more. Don't be swayed by city commentators reflecting on the tech sector massacre in 2000, because the real success story here is not, as you might expect, the start-ups getting acquired or even the big players realising they need more than scale and brand loyalty to succeed; it’s arguably the wider tech industry. Where once software ruled; industry is now moving towards a more customer centric view of the world, using data to intelligently understand audiences and their needs in a super-fast, connected planet. This programmatic shift is one that is arguably more impactful and will drive business to the next level.
Rupert Staines is European Managing Director at RadiumOne