Matthew Hall August 02, 2012
High hopes... David Karp, of Tumblr, wants to make people care about brands on social media.
Social media sensation claims to be close to cracking revenue puzzle.
Why would you work in Silicon Valley, when your Manhattan bachelor pad-like office is full of pals who feel they are about to crack social media's biggest conundrum: how to make money.
Meanwhile, there's beer on tap, vodka stacked on top of the fridge, bags of snacks scattered around, couches and a table tennis table. Welcome to the New York headquarters of Tumblr.
After Facebook and Twitter, 100-employee Tumblr is the next social media phenomena capturing both users and attention. A blog platform that meets a social network, it is the envy of other wannabe technology companies. For users, it's an excellent idiot-proof platform with functionality that allows even people who hate to write the opportunity to create blogs or their own content.
“We have photographers, writers, comedians, journalists, stylists, filmmakers, musicians…” David Karp, Tumblr's 26-year-old founder and CEO, told IT Pro in a rare interview.
User statistics back the 26-year-old's enthusiastic pitch. Tumblr claims to host 66.9 million blogs that reach an audience of 140 million people all over the world. That translates, according to its own figures, to 70 million posts per day and 17.5 billion impressions per month.
He points to industry figures that say Tumblr user engagement is several minutes higher than Facebook user engagement. Gender split is roughly equal. International uptake is rising with US traffic recently overshadowed by south-east Asia, Japan, Britain, Brazil and Australia. The expansion has been organic however.
“We've never really had any special strategy for our international development,” Karp said.
In other words, Tumblr, launched five years ago as a side project to Karp's role with another start-up, is killing it. Lady Gaga has a Tumblr blog. So does President Obama, presidential rival Mitt Romney, and The New Yorker magazine. There are also blogs dedicated to poems, cute kittens, and quirky charts. Everyone is into it.
But is it making money?
The young innovator - Karp was among MIT's top innovators under 35 in 2010, is looking to old-fashioned advertising. Three months ago, Tumblr launched an advertising model that allows companies using Tumblr to, in Karp's pitch, “elevate them to the audience they really deserve”.
So Tumblr, which sees itself as a media company, is ironically looking to crack a code that has eluded so many digital media companies: how to generate revenue online.
“There are plenty of businesses whose success is still built on their ability to advertise effectively and build customer base,” he said, explaining what he hopes will be Tumblr's point of difference.
“Instead of focusing on the hyper-targeting that Google and Facebook are selling [to] advertisers right now - a direct response from the audience - we have built our advertising products around creative brand advertising because we're a media network. We have advertisers who are, rather than trying to capture intent, are trying to create intent.”
In other words, according to Tumblr, the more accountable banner ads and click-throughs that advertisers love are dead. Success will be in making people care. In a way it's back to where advertising started - creating awareness and desire - both of which are harder to measure.
“[There] is a mismatch of service that these big networks have centred on, grabbing that click when that person is unlikely to be thinking about wedding dresses right now or looking for an iPod at the cheapest price they can get.
“The products that we have rolled out are built upon creative advertising that inspires customers when they may have not previously cared.”
Karp, who shares a go-get attitude (and, no doubt, insights) with his friend entrepreneur guru Richard Branson, believes Tumblr's success is dependend on treating the platform as a media rather than technology company. Connected to that is a conscious decision to be based in New York over San Francisco or Silicon Valley.
“There was no way anyone would get me to move to the Valley,” he said.
“Being in an environment [like New York] that values creators, that values media, whether it is an aspiring gallery on the Lower East Side or Viacom or NewsCorp up the street that have audiences of hundreds of millions all over the world has done a lot to define Tumblr to us as a media network.
“On the West Coast, you hear so often that 'it feels like the future out here'. In my mind that's because it's largely an environment saturated with first adopters, saturated with people who live and breathe technology. It is not a good environment that thinks about mainstream.”
Karp watched Facebook's IPO with keen eyes. Mark Zuckerberg's experience on Wall Street (and that of Facebook's investors) was a historical marker for Web 2.0. For Karp, who has made something popular from a great idea he had as a 20-year-old, what happens next for Facebook is critical for the industry.
“It was very important for everybody in the industry to be rooting for Facebook,” said Karp. “It is important for this industry to prove that a social network can be worth billions of dollars. That whole world is still pretty far out for us. We're still in the mode of proving our business model and building a sustainable business here.”