Monthly Archives: May 2013

Why Yahoo Bought Tumblr?

“F*ck yeah”

Ended David Karp (founder of Tumblr) his announcement about upcoming Yahoo-acquisition. He is not the only one amped up about the deal. Internet has been buzzing about the Yahoo´s recent acquisition of Tumblr. On theory marriage of Tumblr & Yahoo looks rational. Will it be that on practice?

What will Yahoo get from Tumblr?

1. Reach (especially to the young target audience)
Currently Yahoo has over 700 million unique visitors/month and Tumblr with its 300 million unique visitors and over 100 million blogs might help it bypass the 1 billion-visitor threshold. Yahoo is buying growth.
Tumblr user base is also the youngest among the different social media channels. It is stronger than any other social network within 13-18 and 19-25 demographic. As the buying power of teens and tweens increases even more, this target audience becomes more and more lucrative for marketers. It is therefore important to reach them young and maintain that relationship.
2. Gateway to Social Media & Mobile
Like many of its peers, Yahoo has been struggling with social media & mobile. It actually has a more impressive track record with screwing up potential social media opportunities (Flickr-which has been rewamped today as well, Geocities, than utilizing them. By buying Tumblr, Yahoo will get healthy social media which has been designed to be mobile-first from the beginning.
3. Street Credibility
Yahoo has not been a flavor of the month in recent years. Tumblr acquisition is exactly the kind of bold move that shareholders love. It is also the most prolific action Marissa Mayer has yet announced after taking the helm of the struggling company last year. Will it be the right move? That remains to be seen.

What will Tumblr get out of the deal?

Coherence & Monetization
Being the most user-friendly blog platform has its benefits, but also certain challenges. Tumblr is also the world´s most NSFW blog platform filled with porn, politically incorrect gifs and one-off-jokes (not even saving the founder David Karp). How Tumblr will maintain its characteristic quirkiness, but become “brand safe”? Currently adult sites are the leading category of referrals for Tumblr. Yahoo, as a household name, will give more legitimacy for Tumblr and probably help to clean up its act.
Tumblr has also been struggling with monetization and its business model throughout its whole existence. Whatever you say about Yahoo, you cannot dispute their skills and strengths on traditional ad sales. With Yahoo sales teams with interactive advertising (Tumblr) on their toolkit, it will be quite interesting selling point. The challenge is to find ad solutions which are seamless and enhance user experience.

What next?

Based on the statement from Marissa Mayer, it is quite improbable to see radical changes with Tumblr in the immediate future. The model for the Yahoo/Tumblr-coexistence will probably follow Instagram/Facebook –route where Instagram has remained relatively independent from Facebook. Many are likely to draw parallels between this acquisition and the quite ill-fated Geocities-acquisition from 14 years ago, but I am not that pessimistic. Tumblr definitely fills certain problematic gaps within Yahoo´s current strategy.

The crucial questions are whether the synergies that look obvious on paper come to fruition in action and was the price right?

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Modern Marketing: Are You Throwing Javelin or Shooting Hoops?

I might be biased as a Fin, but javelin throw is the most entertaining track & field sports ever. However, what makes good spectator sports is not necessarily good way to do marketing. Many companies are still stuck in the old ways of doing marketing, which painstakingly resemble the Finnish national sport:

Javelin Throw: Traditional Marketing

Seppo Räty, the best Javelin dude in the world

Seppo Räty, the epitome of no-frills javelin thrower

– Fixed amount of trials: In javelin you get six trials to prove that you are worthy. In traditional marketing you do couple of campaigns a year.
– Individual: You only worry about your own performance.
– No room for improvisation: You do what you have practiced and try to duplicate your practice performance. If things start to go sidetrack, it is hard to make changes in competitive situation. Same with big marketing campaigns, when they veer off-the-track you cannot really save them. When javelin is released, you can only hope for it to be a good throw.
– Make it or break it –situation: You either make the throw or not. Your bi-annual campaign is either hit or not. Success of the whole year is judged based on that single try.

Basketball: Modern marketing

In your face

This dunk is one of the many baskets done on the single game.

– No limit on trials, but limited amount of time: Trials depend on your opportunities you get during the game. The best players seize the good opportunities, but occasionally take bad opportunities as well.
– Collaborative: The success is not only based on the individual, but on how well your team is playing and also the level of your opponent.
– Room for improvisation: Practice is important and creates the core of what you do well. Your core skills also contribute to the average probability of succeeding (among other things). That is why it is important to invent as you go along. Success is about talent, hard work & many trials. More you try, the luckier you get.
– End-result matters: Individual throw can go in or not. Only thing that matters by the end of the day is the total amount of shots you got in and have they contributed to your team win. Some shots are more important than others though. One of the most important skills nowadays is the skill to recognize those important shot opportunities and seize them.

If we want to succeed in this changing world, it is not sufficient to improve our technique in the existing game. We have to totally change the sports we are in.

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How Hollywood Studios Predict Themselves to Fail

Due to the combined effect of the cheap movie prices and quite limited indie movie selection in Singapore, I have watched way more Hollywood movies during last year than I should. Based on that empirical research, I have to say that the overall quality of Hollywood films is currently really horrible.

The main reason for that is that studios have never played so safe as now. They have not necessarily been pushing the envelope before, but the shift even from “Spec-script”-era to current “Script Doctors” has been radical and unfortunately radically to worse. Still we see almost the same rate of failures as ever before, even though we are bombarded with lame-ass attempts of creating franchises. At the same time, HBO has proved that you can have compelling and challenging quality content and great revenues at the same time.

Why movie studios are missing the beat?

1. Past success does not necessarily predict future success
We tend to believe that our success is about our own achievement and failures are just a bad luck. In reality, it is mostly about luck. Many people claim to find formula for success, but actually they just extracted the similarities in successful projects and draw correlation from individual instances. That is easy. What is difficult is to find the actual combination and correlation of those extracted elements. This is especially true for surprise successes. The sequel for Blair Witch Project scored way worse in the box office than the original (although still profitable). Things tend to regress towards mean, so after abnormal success you are more likely to have normal success. In relation to abnormal success, anything closer to the average is regarded as failure.

2. Finding correlations where there is none
We correlate high education level with high productivity. According to many experts (such as Alison Wolf), this correlation is not true. It goes other way around: countries with high productivity tend to gain high education levels during time. According to the “script doctor” in the article you should not have bowling scenes in your script as on average they do not score that well. I have only one thing to say for the script doctor: Big Lebowski.

3. Everything unfamiliar scores bad in the tests
Would you have predicted the success of Indonesian Raid:The Redemption or Beasts of The Southern Wild? Fight Club scored really badly in opinion surveys but was highly successful in the box office. People tend to resist everything unfamiliar until they start to like it (case in point: Outkast-Hey Ya). I am not huge fan of tests, surveys and research, because at best they are just a poor reflection of reality. You can predict and test your movie as much as you want, but at the end-of-the-day the box-office is all that matters. Tests do not reduce risk, they just reduce your awareness of risk.

4. When playing safe, you will have only negative surprises.
Every major movie could not be prepared better: they are script-tested, based on existing franchise, have massive social media campaigns and start on more theatres simultaneously than ever before. Still many of the estimated blockbusters fail. They are predicted to be too big to fail, so they can only provide negative surprises.
The abovementioned small budget movies (Raid & The Beasts) have better ROI% than the biggest movie last year (The Avengers). And in the terms of pure cash, they got almost the same profit as the epic John Carter. That movie was considered as the biggest flop last year, although it was eventually profitable (globalization plays in favor of big movies, at least for the moment).
The main catch is that with the budget of John Carter, you could have produced over 200 Beasts of Southern Wild -movies. There are opportunities for 200 positive surprises.

The last point is really important in modern day marketing. We spend too much time predicting on the outcomes instead of actually doing things. As the potential outcomes are unknown in reality, the goal to succeed is the following:

1) Increase the amount of tries: There are no clutch players, just those who keep on shooting.
2) Limit the potential loss: Think like venture capitalist: the probability of success is relatively low, so you do not want to put your eggs in one basket.
3) Make it flexible: When you struck the goldmine, invest more. When it fails, kill it quick.

This is the “Anti John Carter” –approach. You will try more, fail more but win more on the long run.

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