How does GIPHY make money?
And why Facebook paid $400M for a library of GIFs
This is Edition #4 of the newsletter. You can find the previous editions here.
About GIPHY
GIPHY is an online database and search engine that allows users to search for and share short looping videos with no sound, that resemble animated GIF files.
Here’s an excerpt from an interview with GIPHY founder Alex Chung -
“GIPHY started out as just a project I did for my friends. It started from a weird philosophical conversation about language, and how we only have a few words for love in each language, and maybe a few emojis. But there’s a million different ways to express love. And there was no way to send, or communicate those types of expressions to other people.
So we came up with this idea of an expression search engine. Some way to catalog all the expressions of the world, so that if you’re trying to communicate love, you have a vast array of different kinds of love you can send to your friends or family. Words just sometimes aren’t enough, especially in cross-cultural situations.”
It’s GIPHY you’re interacting with every time you search for GIFs on iMessage, Twitter, Facebook, Messenger, and Instagram, among others.
Facebook announced its acquisition of GIPHY for $400M and it sent the tech Twitterati into a frenzy.
Stats
🐣2013 Founded
👩💻700M Daily Active Users (2019)
💸$150.9M Raised
🦄$400M Acquired by Facebook
How they make money
GIPHY is by far the biggest GIF search engine.
Did you know, it’s actually the second largest search engine in the world by total searches, only behind Google. GIPHY serves over 10 billion GIFs daily across messaging and social media apps.
Heard about GIF Engine Optimisation? Find more here!
Revenue from Brand Licensing
GIPHY has partnered with over 200 companies and brands to host all their existing content on their own branded channel.
Here are some examples:
With GIFs being searched and shared across all social media channels, brands can increase the chance of its content being seen and shared across messaging and social media apps – and earn hundreds of millions of meaningful brand impressions. GIFs provide a new medium of marketing that is currently under-utilized by brands.
Future and Facebook’s plans with GIPHY
50 percent of GIPHY’s traffic already comes from Facebook’s apps including Messenger, Instagram, and WhatsApp. With GIPHY, Facebook will have another route into competitor’s apps — and that’s causing some people to rethink how they use the fun, conversational GIF tool. Here’s how Facebook could monetize GIPHY:
Imagine if a brand could place programmatic ads in GIFs through Facebook Ad Manager and measure the impressions as the funny GIF travels through IG Stories, WhatsApp, iMessage, Slack, etc.
Also, with GIPHY, Facebook could start advertising in Private Messages - one of the most used features of Facebook’s ecosystem that hasn’t been monetized… yet.
Given that GIPHY is already the second largest search engine, Facebook could also generate ad revenue by promoting branded GIFs on the GIPHY search network.
$400M for this ‘library of GIFs’ is a steal in my opinion. As it is evident from Instagram and WhatsApp acquisitions, Facebook does know the M&A game well.
I’m new to this and would love to hear your thoughts. Appreciate it if you could share this with your network who might be interested in learning about such unique business models.
To receive a weekly article about a new company’s business model, subscribe now!
For more such content, follow me on Twitter.