At yesterday’s Ad Tech New York conference, Union Square Ventures investor Fred Wilson dismissed the notion that Tumblr will go the way of GeoCities. Mr. Wilson should know: he invested in both.
Although the two platforms, which both grew out of empowering community and self-expression, may share a similar trajectory–explosive traffic, scads of funding, sky high valuations–he argued that Tumblr has modern social media’s emphasis on the news feed (for elegance of consumption) combined with a different approach to advertising.
No kidding! Geocities couldn’t stop itself from slapping on ads, alienating users without delivering for advertisers. “The performance and appearance was ugly,” Mr. Wilson said.
Tumblr founder and CEO David Karp, on the other hand, has changed his tune over the years from a distaste for advertising (it “turns our stomachs“) to defensive. Last year, he told Chris Dixon, “Making money off of Tumblr would be incredibly easy,” and that an AdSense ad on the dashboard of every Tumblr user would make it “wildly profitable.” But he’s holding out for revenue-generators that “enhance the experience for our users.”
Unlike GeoCities, Mr. Wilson noted, lower development costs have bought Tumblr, which was founded in 2007, more time to figure out a better model. Reporting from the conference, GigaOm says:
But the Tumblr approach also reflects lessons learned from the Web 1.0 era. Wilson says one of these is that scale must come before monetization: if a company focuses on advertising too soon, chances are that it will build a faulty product that will never scale.
With 20 billion pageviews a month, Tumblr seems to have the scale thing under control. So about that monetization? Like much of New York tech and media these days, Mr. Wilson is putting his faith in “native advertising,” the same concept Mr. Karp pitched to execs at Advertising Week:
“If you just slap up some generic ad format, people tune it out and it doesn’t perform,” he argues. “People don’t hate advertising. They hate bad advertising, interruptive ads or poorly targeted ads.”
Wilson thinks sites should follow Twitter’s lead and ensure ad content is the form of an atomic unit that mimics the native content – a tweet on Twitter, a video on YouTube and so on. For the advertiser, the formula is to develop great organic ad content and then pay the platform to promote it. (It should be pointed out that Wilson has stakes in both Twitter and Tumblr; still, the observations seem sound).
Design-forward native advertising definitely meets the pretty standards of the new web exemplified by Tumblr and upstart competitors like Svtble. The only question is: can they perform better than the hideousness they replaced?
