Tumblr to look to contextual ads and e-commerce for revenues

Looking to enable bloggers to sell products

Tumblr is looking to widen its revenue streams to include contextual advertising and e-commerce, with the firm exploring monetisation methods following huge growth. Its director and media evangelist, Mark Coatney, tells StrategyEye that Tumblr is exploring targeting methods that will not alienate users, and bulking out its existing internal commerce platform to allow retailers to sell items more easily through their blogs. Coatney says that while Tumblr’s strong growth – the firm reached the 20 billion posts milestone late last month – means that it could easily make money from display ads on its main dashboard, the firm is keen to stick to “useful” advertising.

If we put an ad on the dashboard, that’s 10 billion views and we could generate some revenues, but we’d rather not do that, because that’s a blunt instrument,” he says. “We’re thinking of ways for advertisers to create great Tumblr blogs, and then we’ll think of ways to get that information to the right people on Tumblr.”

Alongside a bulked-out ad platform, Tumblr may also offer its own e-commerce infrastructure to enable bloggers to sell products, with the firm taking a cut of sales.  Currently, the firm offers a sales platform with its ‘Theme Garden’, where third-party designers can sell custom Tumblr designs at a price, with Tumblr taking a small fee. According to Coatney, the firm has already experimented with adapting this existing service to enable users to sell more items beyond blog themes. Although Coatney indicates that both the advertising and e-commerce services will launch this year, he does not give a timeframe.

While Tumblr is experiencing record growth, its slim revenue streams have attracted concerns over its long-term viability. However, the firm raised $85 million in funding in September last year and a $800 million valuation to boot. According to Coatney, Tumblr’s growing presence in markets such as Brazil, the UK and Japan is partly fuelling investor interest in the firm. “It’s a globally diverse growth – it’s not just a US-centric service, and that’s very important for the valuation,” he says. “It speaks to Tumblr’s potential as a worldwide service.”

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