Inside Tumblr's Massive Monetization Opportunity

Tumblr revenue still hasn't pierced the $100 million-mark. In 2012, it booked only $13 million in revenue. It expects to ramp up to $100 million by year-end. 

Even though Karp once openly declared his opposition to it, advertising is expected to be the primary monetization initiative. 

In a new report from BI Intelligence, we offer a primer on Tumblr as an emerging ad medium and look at their monetization opportunity - as well as that of the entire social media industry. 

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Here's why Tumblr has a huge revenue opportunity, and how it's trying to realize its potential:  

• Tumblr has scale and reach: In November, CEO David Karp told GigaOm that the blog platform was now serving 20 billion page views per month, up from 15 billion earlier in the year. 
• Tumblr's user base is desirable: Tumblr currently has a few options to reach its highly engaged user base, which has a high proportion of users in their teens and early twenties, desirable demographics for many advertisers. Tumblr's penetration in the 13-18 and 19-25 year-old demographics is higher than any other social network - including Facebook, Twitter, or Instagram (see chart above).
• Radar and Spotlight: Tumblr Radar and Tumblr Spotlight help sponsors showcase their content and get more followers or reblogs, which is when a Tumblr user reposts your content to their own followers, similar to a retweet. Radar is on the right rail of the the dashboard. Like Twitter's suggested accounts, it does not only feature sponsors, but generally seeks to guide users to relevant content and deepen their engagement with the site. Spotlight does a similar thing, highlighting accounts users may like based on topic.
• In-Stream: In April, Tumblr launched its biggest advertising initiative to-date: mobile in-stream ads. It is the first time that it will allow advertisers access to its vaunted stream, where users see friends' posts and their own. The advertisements will look like regular posts and Tumblr says their users will see no more than four ads a day. Essentially, they are like Facebook's page post ads or Twitter's promoted tweets, further signifying a consensus around in-stream ads. 

In the new report , we also analyze the state of social media advertising and where it is heading, offering a comprehensive guide and examination of the advertising ecosystems on Facebook and Twitter, and detail how mobile is an important part of this story as mobile-friendly as native ad formats fuel growth in the market.

To access BI Intelligence's full report on The State Of Social Media Advertising, sign up for a free trial subscription here.

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