Tumblr made $13 million in revenue in 2012 and hopes to book $100 million in 2013, according to Forbes.
The blogging/social media site spent $25 million on operating expenses in 2012 and expects to spend $40 million this year -- meaning it will hit operating profitability soon if CEO David Karp meets his goals. The company has taken $125 million in funding from its backers.
This is all good news for the company. Tumblr generates about 18 billion pageviews a month. The fact that it has only monetized a tiny fraction of that (through ads and sponsorships), and yet is already trending toward profitability indicates that it could be a powerful business if Karp ever decides to allow advertisers more access to his users.
The users will hate it, of course.
But so far Tumblr has been very careful. It has restricted paid media to its "radar" and "spotlight" features, which take up a tiny proportion of each user's dashboard. Most of those paid ad exposures can't be seen unless you have an account and are logged in.
Tumblr hasn't even begun to sell most of its real estate to advertisers.
Yet Karp has moved closer and closer to the ad biz all through 2012. Consider:
- He signed up a traffic analytics company, Union Metrics, to give marketers real performance data.
- He named 12 agencies to a hot list of companies tapped to work with Tumblr.
- He poached Groupon sales chief Lee brown to be Tumblr's ad sales chief.
- He set a minimum buy-in price of $25,000.
- He hired Rick Webb of The Barbarian Group to build sales and marketing.
- And he did all this after spending years insisting he was not interested in advertising, a position he maintained even in early 2012.
Given its traffic, if Tumblr were to install even the most basic web ad operations -- by selling a native ad format on a private exchange, for instance, like Facebook does -- it would instantly become fantastically profitable.
It would never do that, of course. And if these new numbers are true, then it will never need to.
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