Tumblr: Yahoo paid how much?

I’ve had a little bit of time this morning to sit down and actually analyse the Yahoo deal for Tumblr which was announced last week.

I warn you, if you are expecting enlightenment on whether Tumblr can re-energise the Yahoo brand you need to go elsewhere. I haven’t a clue.

Equally, if you want my pearls of wisdom on the Tumblr demographic and whether it can deliver a younger generation to an ageing Yahoo customer base – you need to move along.

Same with online advertising and whether Tumblr will lose its followers if Yahoo tries to bombard them with ad’s. Please ask someone else, preferably someone from the WPR digital team.

However, I am qualified to examine the financials and they are eye-watering.  For a paltry $13 million revenue (that’s revenue not profit) Yahoo have paid $1.1 billion.  That is a multiple of 84 times revenue!

The move has been described as a “bold bet” by Yahoo Chief Executive Marissa Mayer.  Well yes that is one way of describing it, another would be lunacy.

Talk about betting the farm, Marissa has bet the tractor, the animals and re-mortgaged her parents’ home along with it.

What has been clear from the Tech’ Boom onwards, of which I was a part (where are you now OneSea.com?), is that these companies are incredibly difficult to put a price on. Buyers are buying potential which, all too often, fails to materialise.

Martin Sorrell describes the digital age as anarchy. He’s right and this deal looks like a desperate act to try and bring order to an anarchic world, which ultimately will fail.

PS: I have spoken to those in the know on our digital team and they tell me that there is a good case for saying that Tumblr has had its day (already)! One fears that this isn’t going to end well for Marissa.