Why Facebook Didn’t Find Tumblr Lucrative

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Facebook Inc. (NASDAQ:FB) could easily have bought Tumblr Inc. if it wanted to, but the social networking giant didn’t. The Mark Zuckerberg led company has experience, capital and necessary expertise. Its visual advertising in feeds generates billions of dollars every year. That’s exactly what Tumblr dreamed of becoming, says Jason Stein of CNBC.

Why Facebook Didn't Find Tumblr Lucrative

Before Yahoo! Inc. (NASDAQ:YHOO) announced its acquisition of Tumblr for $1.1 billion, there were reports that Facebook Inc. (NASDAQ:FB) may come up with its own offer to purchase David Karp’s start up. The young adult users of Tumblr would easily have preferred Facebook Inc. (NASDAQ:FB) over Yahoo! Inc. (NASDAQ:YHOO) which they consider an old generation company.

Challenges Facebook Would Have Faced

So, why didn’t the Menlo Park-based company go ahead and acquire Tumblr? The biggest reason is that Tumblr is struggling with mobile. Facebook Inc. (NASDAQ:FB) and its photo sharing app Instagram both are ranked among top mobile apps. But the short-form blogging site founded by David Karp gets most of its traffic from desktops and laptops. Since not many people use this app, they can’t be reached for paid promotions.

Acquiring Tumblr would have pushed Facebook Inc. (NASDAQ:FB) one or two years back. And it would have required Facebook to work and invest in developing a scalable mobile business model for Tumblr. People go to Tumblr to find content, and the best app to get the latest content on Internet is undoubtedly Twitter. So, Tumblr didn’t make sense for the world’s largest social networking giant.

Facebook Inc. (NASDAQ:FB) purchased Instagram because it has young mobile users and the photo sharing app fit perfectly into Facebook’s ecosystem. A large part of the Facebook Inc. (NASDAQ:FB) news feed consists of photos where Instagram fits perfectly. Instagram photos also help boost advertising because they get a lot of engagement, making way for e-commerce conversations.

In contrast, Tumblr content mostly consists of copy, titles, embedded videos, blogs, links, GIFs and porn, which Facebook Inc. (NASDAQ:FB) might not have easily inserted into the news feed. However, the biggest difference between the two companies is that Facebook operates its business around true identity. Its users have real names, real profiles, real friends and real location. Facebook users can engage with their friends and family, while Tumblr is fueled by blogs managed by real people using monikers, and where serving a native ad is really hard.

Facebook Inc. (NASDAQ:FB) shares were down 0.38 percent to $25.67 at 3:28 PM EDT.

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