IB Business IA

Topics: Income statement, Google, Balance sheet Pages: 28 (5696 words) Published: February 25, 2015

2013-2014
Standard Level
IB Business and Management
Internal Assessment

Will the acquisition of Tumblr by Yahoo significantly help this former “internet pioneer regain traction with younger internet users”?

Word Count: 1438
Candidate Name: Phoebe, Leung Ching Lam
Candidate Number: 003069-037
Class: F6.CassiaContents Page

1. Introduction

The purpose of this essay is to investigate whether the acquisition of Tumblr by Yahoo will significantly help the former Internet pioneer regain traction with younger Internet users. Yahoo used to be one of the most popular website and search engine in the early days of Internet. It has provided a large range of services to its users, including instant messaging, electronic mail and social network services. (Yahoo, 2013)However, its popularity quickly declined in the recent years and was quickly surpassed by newer websites, such as Google and Facebook. The younger generation barely knows about Yahoo and it has problems maintaining high growth or exposure like other Internet companies.

As the younger generation is very important for the Internet industry as they are the major users of it, Yahoo would like to increase its market share in the teenage and young adults sector by either developing new services on its own to cater the needs of theirs or to buy companies that are popular among them. (Yahoo press release, 2013) Possibly because of this, Yahoo choose to buy Tumblr, a microblog website that is popular among teenagers with a good presence in the smartphone fields as well.

In this essay, primary and secondary research will be done in order to find out whether this acquisition is beneficial to Yahoo in its expansion to the youth market or not. Calculations on the cash flow well as literature reviews will be done in order to achieve this goal. Also, analysis would be made according the knowledge learned from lessons and textbooks. 2. Findings and Analysis

2.1 Marketing

Although it is quite expensive to buy Tumblr, Yahoo can get more attention from the media by buying Tumblr. According to the CEO of Yahoo, “Tumblr hosts 105 million different blogs. With more than 300 million monthly unique visitors and 120,000 signups every day, Tumblr is one of the fastest-growing media networks in the world.” (Yahoo press release, 2013) This large amount of blog posts gives Yahoo the click rates it needs and this may in turn generate more advertisement revenue from it.

Yahoo is fading in the face of competition from Google. For example, Google has a large variety of services and software provided, for example Google Translate and Google drive. Also, it went to the mobile market, developing the android system and is very popular. When we look at Yahoo however, it does not have much popular new services in recent years and therefore is far behind Google in its market share. By buying Tumblr, it may be able to regain some market share in the social networking field, especially among teenagers who are big fans of microblogging.

In fact, Tumblr could be key to Yahoo’s new focus in the teenage market because it is widely popular among youngsters, especially the ones in Europe and United States. According to the CEO of yahoo, Tumblr could help Yahoo grow audience by 50% to more than a billion monthly visitors, and could grow traffic by approximately 20%. (Dailymail, 2013) Tumblr can help yahoo to tap into the younger, active online user base at Tumblr. A survey this year conducted by the online data group Survata found Tumblr more popular than Facebook among those aged 13 to 25. (Dailymail, 2013) Also, it has a good presence in smartphones and almost half of the users are willing to use it on the go. Therefore it can help Yahoo to attract young audience, while Yahoo is more used in the over-50 age market.

Besides the large amount of access brought by Tumblr, the users of the website may also create a hip, younger image to Yahoo. Celebrities...

Bibliography: BBC News - Yahoo to buy Tumblr for $1.1bn. (n.d.). BBC - Homepage. Retrieved August 24, 2013, from http://www.bbc.co.uk/news/business-22591026
Isidore, C
Yahoo! to Acquire Tumblr (NASDAQ:YHOO). (n.d.). Yahoo! Inc. - Investor Relations. Retrieved August 24, 2013, from http://yhoo.client.shareholder.com/releasedetail.cfm?ReleaseID=765892
5
Yahoo - Yahoo! to Acquire Tumblr. (n.d.). Yahoo - Investor Relations. Retrieved October 20, 2013, from http://investor.yahoo.net/releasedetail.cfm?ReleaseID=765892
Supporting Document 2 – Financial Statements for Yahoo! Inc
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