“Yahoo can’t expect to see much revenue from Tumblr until maybe 2014, says Ben Straley, a vice president with Rio SEO, a company that builds ad campaigns around social and search.”
Yahoo (YHOO) CEO Marissa Mayer continues to be aggressive, embracing billion-dollar acquisitions to get the buzz — and ad dollars — building at the big Web portal.
Yahoo has committed $1.1 billion to buy social blogging site Tumblr, but that deal hasn’t slowed its willingness to spend maybe $800 million for video site Hulu. It’s looking like it might have to spend more to win the video firm, however, testing how far the new CEO is willing to go.
But Hulu would be a more important immediate acquisition than Tumblr, observers say.
“Hulu makes a lot more sense strategically than Tumblr,” said Vertere Group CEO Tim Hanlon, a Chicago-based consultant and investment adviser. “It comes with a well-understood advertising mechanism, which is the 30-second commercial.”
Internet video site Hulu last week reportedly received several takeover bids, perhaps sparked by word of Yahoo’s offer, which AllThingsD reported was for $600 million to $800 million.
(The blog on Thursday made a case why Yahoo might also consider buying local check-in site Foursquare.)
And AT&T (T) and the Chernin Group investment firm are considering a bid, AllThingsD reported Thursday. Hulu and AT&T both declined to comment on that report.
Yahoo is interested in Hulu, but it likely won’t be the highest bidder in part because of all the money it just spent on Tumblr, wrote Wedge Partners analyst Martin Pyykkonen in a Wednesday research note.
Hulu, however, has a targeted advertising network and would generate revenue for Yahoo right away. That’s a goal for a company that despite attracting as many visitors as almost any Web property hasn’t seen a significant rise in revenue since 2006.
The blogging network Tumblr, on the other hand, has stepped only lightly — and somewhat reluctantly — into advertising.
Tumblr CEO David Karp, who will remain in his position after the acquisition, in 2010 told the Los Angeles Times that advertising “turns our stomachs,” but later softened his views and started putting some small ads on Tumblr last year.
Tumblr, with 300 million unique monthly visitors, has also started rolling out “sponsored” blog posts on users’ mobile apps.
Yahoo declined to comment on its Tumblr ad plans. The acquisition is expected to close this year.
Read More At Investor’s Business Daily: Yahoo Tumblr Deal Called Good; Hulu Would Be Better