Tumblr is Blowing Up — So When Will Its Business?

Lady Gaga joined on Monday. MTV jumped on board about a month ago, joining other media companies like CNN and The New York Times. Even major brands like General Electric, Huggies and Microsoft are all on Tumblr.

What’s still not on Tumblr is any sort of traditional advertising. And most digital media experts say they don’t expect Tumblr — the increasingly popular blogging/social media hybrid — to start running advertising for at least a year to 18 months, if ever. Which begs the question, where is all of this going? What is Tumblr’s long-term business strategy? And will brands and publishers play a major role?

The four-year-old company, which has amassed $30 million in funding, is undoubtedly growing at an exponential rate; Quantcast puts its unique monthly audience at over 27 million. Still most popular among the technorati and teen crowds, the platform boasts of over 21 million blogs that have yielded over 7 billion posts to date and over 8 million page views a month.

Tumblr has carved out a nifty middle ground between pure blogging tools like Blogspot and social news disseminators like Twitter. Anybody can post their own text, videos and photos and create a highly personalized public showcase — or simply follow others and share an occasional link. Tumblr is also designed with the intention of being super-easy to use with mobile devices.

Most believe that Tumblr executives are concentrating first and foremost on growth and will figure out how to make money on this huge impassioned user base sometime down the road, just as Twitter and Facebook have done.

“My read on this is, they are in no hurry to monetize,” said Steve Rubel, evp/global strategy and insights at Edelman. “They are all about getting organic growth. This is right out of the Fred Wilson playbook. Get users, users, users and get the press on board.” Wilson, principal of Twitter investor Union Square Ventures, declined to comment, and officials at the company were unavailable.

It’s true that Tumblr is having a moment in the media world. Former CNN anchor Rick Sanchez has recently begun using the product enthusiastically. And, of course, last summer former projects editor at Newsweek Mark Coatney became Tumblr’s media evangelist of sorts.

The more media users Tumblr gets, the more headlines that should follow.

“That’s when Twitter went nuclear,” said Rubel. “When celebrities and journalists jumped on.”

While Rubel mentions Twitter’s now red-hot ad business as a model for Tumblr, Gartner Research analyst Michael Gartenberg likens Tumblr to a far different tech juggernaut. “I see them taking a different approach, focusing on more micro-transactions and personalization features that people will pay for. I see their business like Zynga’s where a lot of smaller transactions add up to a lot.”

Currently, users can pay small fees (around $10) to have their Tumblr listed in a directory or to implement certain design elements.

Gartenberg expects more low-cost add ons to come. “It’s certainly a different approach than others in the market are taking,” he said. “I think they’ll focus on smaller efforts that add value to users’ Tumblr’s.”

As for now, many brands have stayed away, while others use Tumblr as a marketing or public relations vehicle. For example, GE’s Tumblr mostly showcases a series of photos from its manufacturing and research labs. On the flip side, Huggies has created a unique persona for Tumblr — Highchair Critics — which carries the tagline Spit Up, Bits and Pieces from the Baby News Network, and features a mix of silly photos from visitors and a collection of blogs from regular contributors.

Brands and publishers seem to feel free to let loose on Tumblr in ways they wouldn’t on Twitter and Facebook, possibly due to the site’s younger, artistically-driven audience.

MTV’s four-week-old Tumblr on Wednesday (June 29) carried the headline “Fuck Yeah” followed by a photo of multiple cats, as well as a photoshopped imaged dubbed the Hip Hop Food Pyramid.

“We wanted to speak really authentically on Tumblr,” said Tom Fishman, MTV’s senior manager of social media. In fact, MTV met directly with Tumblr’s top executives before launching its presence to discuss tricks of the trade.

“There is really an aesthetic and language that is unique to Tumblr,” Fishman explained. “Twitter is about real-time information, while Facebook is a hub for our community. Tumblr is about design and creativity and content sharing. So we’ve focused on providing a lot of assets for users.”

As of now, MTV and Tumblr have no financial relationship, according to Fishman. MTV’s Tumblr does feature promotional banners for shows like Teen Wolf. Since launch, it has attracted over 7,000 followers, while traffic to MTV from Tumblr has doubled.

“We look at it as an extension of the brand,” said Fishman. “There is not an urgent need to monetize this.”