Tumblr Holds Its Nose, Opens Back End to Ads

Tumblr has decided to change its tune about ads. Starting May 2, it will sell the featured post spot on the user dashboard to highlight sponsored posts. "We're pretty opposed to advertising," CEO David Karp told the Los Angeles Times in 2010. "It really turns our stomachs." But for the free blogging service, the stomachs of its investors are more important at the moment.

The ads won't be shown on the blogs themselves, but rather in the Radar section where Tumblr users log in. That screen highlights popular posts now, but starting next month, it will show paid content instead.

In Karp's own words from just a week ago, running ads on Tumblr blogs themselves would be "a complete last resort" for a business model. "We're selling our desks to avoid that," he said. But it's probably not a bad idea to sell the Radar section, too.

When introducing the new plan this week at the Ad Age Digital Conference, Karp called himself an "idiot" for his past stance on ads, though he made it clear that he still finds digital ads distasteful.

Tumblr had some miscellaneous revenue streams, such as paid theme designs and the ability to make one's posts stand out in other user's streams for $1. But now it's time to get serious and put all that traffic to use.

Tumblr is an absolute monster traffic-wise. Its 50 million blogs draw over 300 million monthly visits and 12 billion page views. That's eight times more than Wordpress.com blogs.

But without ads, all that traffic just means big costs instead of big profits.

Tumblr has taken on $125 million in funding, including an $85 million round last September. As much as its founders may not like it, somebody has to start paying the bills around there.

With the 50 million blogs on Tumblr, Karp says that advertisers will get 120 million impressions per day from the Radar section.