Tumblr to Introduce Mobile Advertising to Help Achieve Profit

Tumblr Inc., the six-year-old blog network that months ago began letting advertisers pay for prominent placement, expects to make its first annual profit this year after extending the feature to smartphones.

In the first half of this year, companies will be able to promote their posts and blogs to bigger audiences on Tumblr’s mobile application, similar to the way the Web version works, Vice President Derek Gottfrid said in an interview yesterday. Closely held Tumblr has already tested the product internally and is looking to sign up advertisers to debut it, he said.

The number of people using Tumblr’s mobile product has quadrupled over the past six months, edging closer to the number on the Web and making the project more urgent, Gottfrid said. Tumblr Chief Executive Officer David Karp, who has expressed disdain for typical online display and search advertising, is betting he can achieve profitability simply by getting customers to pay to make their own posts stick out.

The average advertising purchase on Tumblr is now “just under six figures,” said Lee Brown, head of sales. “We expect that the monetization will lead us to profitability this year.”

Tumblr, based in New York, hosts almost 100 million blogs that can be focused on a theme -- ranging from the deeply artistic, like a photographer’s best work, to the odd, like “Food on my Dog,” which shows a dog balancing items like pizza, sushi and watermelon on its head. Other Tumblr users can choose to share content on their own blogs or “heart” it, similar to a Facebook “like.”

Coke’s Campaign

Tumblr tells advertisers to come up with campaigns that will spread through the network like its other content. Coca- Cola Co. ran a series of photos following its “open happiness” theme that highlighted simple art, like pen drawings on shoes, instead of blatantly promoting the soft drink.

Tumblr, a startup founded by Karp, now gets more than 16 billion monthly page views worldwide, according to Quantcast Corp. To reach those eyeballs, companies won’t be able to buy display space or keywords in the ways they are accustomed -- Tumblr is “not going to get into the regular ad network,” Gottfrid said.

Instead, they have to pay to get their own Tumblr blogs seen by more people. They can measure impact by how many viewers republished the post on their own blogs or “hearted” it.

“We’re not bringing them a template or format to complete,” Brown said. “We’re giving them a canvas. That takes a lot of time and a lot of thought.”

Promoted Posts

Brown said that although such advertising is untraditional, Tumblr has been able to sell promoted posts to companies including Target Corp. (TGT), Adidas AG (ADS), Lions Gate Entertainment Corp. (LGF) and Christian Dior SA. (CDI) The company is trying to convince customers to use its platform as a starting point to create messages that can then be distributed to other social networks, like Facebook, Twitter and Instagram.

“Marketers have become accustomed to buying scale as opposed to earning it,” Brown said. “We’re not really selling ads, we’re promoting their content.”

Research firm Gartner Inc. expects worldwide mobile advertising revenue to reach $11.4 billion this year, compared with $9.8 billion in 2012. The market could reach $24.6 billion by 2016, the firm said this year.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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