Forecast: Tumblr Will Grow 25% In 2014, But It's Slowing Down

Yahoo paid about the same price for Tumblr, around $1 billion, as Facebook did when it acquired Instagram, and the two had similar numbers of users at the time of acquisition, in the realm of 30 million.
But whereas Instagram growth only accelerated after the sale, passing 200 million earlier this year, Tumblr’s is flattening out, and it will never reach anywhere near that size, according to a new long-term forecast by the research firm eMarketer.
Of course, Instagram-versus-Tumblr is a rather artificial comparison; aside from some surface similarities, they’re not much alike. A photo-sharing service, Instagram is almost exclusively mobile, and just about everything happens inside the app, whereas Tumblr is a multi-faceted publishing platform whose blogs live on the open web as well as within its lesser-used app.
I’ve noted a couple times that traffic to Tumblr sites leveled off after the Yahoo acquisition and hasn’t been growing since, according to the measurement firm comScore. But eMarketer says the number of active users with Tumblr accounts has grown jumping 46.2% last year in the U.S., and it will end 2014 up another 24.8%.

Even with those gains, however, Tumblr will still only have about 17.1 million users in the U.S., or about 40 million worldwide, assuming the geographic distribution of its user base reflects its traffic, which skews 42% domestic, according to the company. (That’s the same calculation I used in estimating that Tumblr had around 30 million active users last year.) And even in 2018, when Tumblr’s growth rate will have fallen to 6%, it will still have fewer than 60 million users worldwide, eMarketer projects.
Does that mean the acquisition was a bust for Yahoo, which has been losing share of the display advertising market to Facebook, Twitter and even Microsoft? Not necessarily, says eMarketer analyst Martin Utreras. Because many Tumblr users have multiple blogs, the number of blogs (currently 200 million) and daily posts (84.2 million) grows at a multiple to the number of users, giving the company a lot of new, mobile ad inventory — if only Yahoo can figure out a way to sell it.

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