Next Instagram-Size Acquisition Could Be Tumblr

By Julia Boorstin, CNBC Correspondent

NEW YORK (CNBC) -- Even if you're not familiar with blogging service Tumblr, you've probably visited one of the 20 billion blog posts on the 50 million blogs the company hosts.

But you may not realize that Tumblr is second only to Facebook in terms of engagement, with its visitors spending an average of 160 minutes on the site each month.

What exactly is Tumblr? It allows anyone to set up a free, simple blog. The idea is for users to be able to quickly post a variety of media--not just text, but also photos, video, and links to content from around the web.

When users come across something interesting online, they can click 'Share on Tumblr' for the content to show up on their blog.

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And the term 'Tumblr' is actually overtaking the more generic 'Blog' term. According to Google Search results, people will search for the word 'Tumblr' on Google more often than they search for 'blog' before the end of 2012.

ComScore just revealed some new numbers about Tumblr's growth--which reveal why it's so valuable to investors. Tumblr drew 1.8 million unique visitors in March - that's a million more than February, and over 2.5 times its visitors a year earlier.

And while Pinterest gets all the buzz for its growth, Tumblr is bigger, without the same copyright concerns.

The business model is nascent--it recently started allowing users to pay a dollar to promote a posting--but the potential seems hugs. Dozens of fashion, media, and publishing companies, from J. Crew, to Reuters, to NBC, post on the service. It allows them to communicate with fans and followers in simple and quick, but more nuanced way than Twitter.

And when it comes to the trend-setting generation, Tumblr could be starting to steal some of users time from Facebook. ComScore says Tumblr usage skews heavily to teens and college-age kids - the 12-24 year-old demographic. And its users tend to be affluent - almost 43% of Tumblr users have a household income of $75,000 or more.

Tumblr, which launched in 2007, has raised a total of $125 million in venture funding. As of last September it was valued at $800 million. Considering Instagram's $1 billion price tag, Tumblr could be worth even more.



--Written by Julia Boorstin at CNBC

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