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Tumblr has its eyes on advertisers' growing video budgets as a way to fast-track its way to $100 million in revenue next year.
Tumblr will roll out its first wave of autoplay video ads within users' feeds on Tuesday. Eleven brands, including The CW, Lexus, Unilever's Axe, Universal Pictures, JCPenney and Hulu, will be the first to test the Sponsored Video Posts before they open up to all advertisers in mid-November.
Video advertising could be an important revenue stream for Tumblr, which aims to become a nine-figure business next year. Yahoo CEO Marissa Mayer said last week that Tumblr -- which Yahoo bought for $1.1 billion last year -- is expected to generate $100 million in revenue in 2015. Attracting brands' growing video ad budgets could help. Advertisers in the U.S. are expected to increase their spend on digital video in 2014 by 42% year-over-year to $5.96 billion, according to eMarketer estimates.
But when it comes to making money from video, Tumblr isn't yet going to the obvious route of tacking on pre-roll video ads.
"We want to make sure that the product that would come out for marketers to take advantage of is not a pre-roll product that's in front of the content that you want to see. It's the actual content you want to see," said Tumblr's global head of brand partnerships Lee Brown.
Tumblr's video ads will take advantage of the social network's new video player that was unveiled last week. In particular, the ads capitalize on the new features that appear designed to make it easier and quicker for people to begin watching a video and rewatch it. It allows for videos to play automatically -- on mute until someone clicks to turn on the sound -- and loop continuously. And people can also "pop out" the videos so they play adjacent to the dashboard feed, letting someone watch the video while scrolling through other Tumblr posts.
Tumblr's new video player supports Vine and Instagram videos, but advertisers aren't yet able to cross-post their Vines or Instagram clips as video ads on Tumblr. Mr. Brown said Tumblr would have to work out with Facebook-owned Instagram and Twitter-owned Vine how it might incorporate their video formats as ads.
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Previously brands could run video ads on Tumblr through its Sponsored Post ads, but those advertised videos wouldn't play automatically, on a loop or pop out of users' feeds. Mr. Brown said Facebook's roll-out of autoplay video ads earlier this year "didn't influence the decision at all" for Tumblr to create its own autoplay video ad product.
Lexus is among those who will be using video on Tumblr. The automaker will be promoting its Lexus Design Disrupted event, which celebrates "design, fashion and technology" according to Tumblr. That video is below and can also be found at a Lexus Tumblr page called "The Signal."
Tumblr does appear to be taking a page from Facebook's playbook as it angles to become a higher profile digital video destination among audiences and advertisers. Like Facebook, Tumblr has been able to boost the popularity of video on its site. The growth in video uploads to Tumblr now doubles photo uploads, the social network claimed. Also like Facebook, Tumblr and and its parent company have been trying to get YouTube's top talent to post videos on their properties. And now, again like Facebook, Tumblr has enabled autoplay for its videos.
Since converting videos posted to Facebook to autoplay, that social network recently overtook YouTube in total number of monthly desktop video views. That's a key stat for companies like Facebook that are looking to take on YouTube more directly. Seeing that a site's audience is watching a lot of video spurs interest among content creators and advertisers. Similar to Facebook, Yahoo is looking to make a play against YouTube, and Tumblr figures to be a key player in its push for YouTube stars, as Ad Age and others have reported.
Even without YouTube talent, Tumblr could gin up advertiser interest by taking advantage of its parent company's extensive footprint to satisfy advertisers' reach demands. While Tumblr claims an audience of 420 million people, the combined Yahoo-and-Tumblr monthly audience crosses the magical 1-billion-person mark, as do Facebook's and Google-owned YouTube's.
Earlier this year, Yahoo began distributing Tumblr's ads on the portal's digital magazines and within its content feeds. However, the video ads will initially be limited to Tumblr. "We're working with Yahoo right now to see what this would look like across Yahoo," Mr. Brown said.
Advertisers will pay for Tumblr's video ads on a per-view basis. But since the ads will play automatically, Tumblr will only charge an advertiser once its ad has been played in view for at least two seconds, in compliance with industry standards. Advertisers will not have to pay for subsequent looping views or any views from users sharing, or "reblogging," the brand's video with others on Tumblr.
Advertisers will be able to target the autoplay video ads based on the gender, location and interest information Tumblr collects about its users. Tumblr isn't putting any length limits on its video ads and isn't requiring marketers to agree to any minimum ad spend level to buy the ad product, Mr. Brown said.
Through Tumblr's analytics dashboard, advertisers will be able to see how many paid and earned views their videos received; the number of impressions, plays, loops, popouts, mutes and unmutes; and how much of the video people watched on average.