Businessmodel of Tumblr

Customer Segments

Tumblr has two main customer segments: individual users who wish to share content online and corporations that use the platform to advertise and further their brand recognition.

Tumblr has one of the youngest user bases of all social media platforms. It is particularly popular with teenagers and young adults who are interested in self-expression. Recent research, that did not take into consideration users under 18, found that in 2015, Tumblr had 19.1 million unique users, the majority of whom were aged between 18 and 29, with users over 45 accounting for less than 20%.

United States represents the platform’s largest market, accounting for more than a third of traffic, with users in Canada, the UK, Brazil and Germany being the platform’s secondary markets.

Value Propositions

To its users Tumblr’s most significant value proposition is that its platform can be accessed and fully utilised free of charge. Ease of access is also a factor, with a desktop site and mobile apps enabling users to utilise the platform’s features from anywhere at any time. To corporations the platform’s substantial user base itself is of value.

Tumblr currently hosts more than 285 million individual blogs, accounting for more than 131 billion posts, all of which have space available for advertising. High-profile brands including MasterCard, Gatorade and BMW have utilised the platform’s suite of advertising options to target new and existing customers.

Channels

Tumblr’s platform can be accessed either through its desktop website at www.tumblr.com or via its Apple iOS and Google Play apps. The Company has also developed an internet browser extension named Bookmarklet that allows Tumblr users to share content directly from the web.

Customer Relationships

Tumblr offers a self-service platform, whereby all the tools required for users to create and share content are available to them from the start. As such, using the site requires little to no direct contact with members of the Tumblr team. The Company does however provide support to its users when needed through an online query form.

The Tumblr platform thrives on a model of co-creation with its customers, with content created by its users. The community created by the Company and its users allows Tumblr to gain greater insight on the habits and preferences of its customers. This is supplemented by detailed data analytics that provide a more accurate picture of trends on the platform. These data analytics also enable Tumblr to more efficiently coordinate with its advertisers.

Key Activities

Tumblr provides an online platform for users to share content – including articles, artwork, videos, pictures, memes and links – and interact using a range of social media tools. Users are able to create their own original work or curate third-party content, follow the blogs of other users and comment on user posts.

The platform also caters to large corporations that wish to further their brand recognition and through advertising and social marketing.

Key Partners

Tumblr’s key partners principally comprise advertising, media and creative agencies, as well as technology providers, data analytics firms and theme developers.

In 2012 Tumblr announced the launch of its A-List Partnership Program. These selected partners are given an advisory role and are encouraged to share resources with the Tumblr team with the aim of providing their clients a better Tumblr experience. They are given direct support from Tumblr’s public relations and brand strategy divisions, receive training from Tumblr staff, and are granted access to Tumblr’s firehose of detailed analytics data. The original A-List totalled 12 agencies. The list currently posted on the Company’s website names ten firms, including creative agencies Bartle Bogle Hegarty, AKQA, and R/GA.

On its website, Tumblr also lists its preferred data partners, which are tasked with analysing activity across the Tumblr platform. These partners are obliged to undergo a stringent evaluation process before selection so as to ensure the reliability of their functionality. These partners include Adobe, Crimson Hexagon and Spredfast.

Key Resources

As an online platform Tumblr’s key resources are its technology, its servers and its data centres, as well as its personnel and financial backers. The Company’s user base itself is a key resource, accounting as it does for the vast majority of content found on the site.

Cost Structure

Tumblr’s major costs come in the form of development and maintenance of its online platform, server and storage system hosting and product marketing, as well as the usual fixed costs associated with running a business including personnel, utilities and renting office space.

The company currently employs a workforce of 372, whose salaries most likely represent Tumblr’s single largest cost. The Company must also set aside for hiring data analytics firms in order to accurately monitor usage of the Tumblr platform.

Revenue Streams

Tumblr’s principal revenue stream is advertising. The Company offers a range of social advertising products:

• Sponsored blogs, which feature a branded avatar and can be found in the platform’s Discovery tab
• Sponsored days, which allow companies to place an advertisement at the top of the site’s desktop and mobile dashboards for a full 24 hours
• Sponsored blogless posts, blog posts and video posts, which appear in users’ dashboard streams
• Sponsored posts on Yahoo!, which can feature an image of video and can link to an original Tumblr post On certain days, Tumblr also permits Sponsored Dots, whereby the period at the end of the Tumblr logo is replaced by a corporate logo. Starbucks, for example, replaced the period with a branded coffee cup for National Coffee Day. Recent reports have suggested that Tumblr also has plans to allow Facebook to sell advertisements inside the Tumblr mobile app as a means of bolstering advertising revenue.

In addition, Tumblr generates revenue via the sale of premium themes, which can be used by consumers to personalise their blogs. Themes can cost as much as $49.