#TUMBLR IS A #WINFORYAHOO!

AllThingsD is reporting that Yahoo!'s board of directors has approved an all-cash deal to buy the social blogging site Tumblr for $1.1 billion. At first glance, purchasing a company for more than a billion dollars with only $13 million in annual revenue seems pretty stupid. However, Tumblr gives Yahoo! access to a young demographic and invaluable experience in developing a compelling mobile experience, both of which are areas where Yahoo! is looking to improve.

Since Marissa Mayer's arrival, Yahoo! has been working to reinvent its image to be more relevant in the age of mobile computing and social media. The company has undergone a massive front page redesign, which it's begun monetizing in a similar manner to how Facebook monetizes its News Feed with Sponsored Stories. Despite borrowing this page out of Facebook's playbook, which combats the threat of mobile cannibalization, Yahoo! has a different problem.

Mobile on the brain

According to comScore, Tumblr reached 37 million unique monthly U.S. visitors in March, of which 25% were mobile-only users. In the same release, comScore found Facebook to have the same level of mobile-only engagement as Tumblr had in the U.S. Both instances compared favorably to Yahoo!, which had 16% of its U.S. users engaging only on a mobile device. In other words, compared to its peers, Yahoo! is lagging behind in mobile engagement, which is arguably a bit problematic in the context of continued worldwide smartphone and tablet proliferation.