
With 200M daily users, Giphy will soon test sponsored GIFs - mcone
https://techcrunch.com/2017/07/31/with-200m-daily-users-giphy-will-soon-test-sponsored-gifs/
======
anilgulecha
Unit economics never works out for gifs. It's historically not worked out well
for normal JPG image hosts. It will most definitely not work out for hosting
files in a teriibly un-optimized video codec.

I think the whatsapp deal probably works out -- but how many of those will
such companies bank against.

One hope could be that disk and network prices become low enough to sustain
some small profit, but when that happens a dozen other hosts will pop up. A
gif website isn't hard to host.

~~~
downandout
Supposedly Imgur is profitable and has been since Day 1. So not everyone in
this space is destined to crash and burn.

~~~
rhc2104
It seems like Imgur was profitable from Day 1, but the early days were
profitable through donations!

[https://www.neowin.net/news/from-rags-to-riches-the-story-
of...](https://www.neowin.net/news/from-rags-to-riches-the-story-of-imgur)

Quote: "Imgur has always been profitable right from the very beginning and the
only time I ever had to spend money on it was for the initial domain name
because as soon as I released it, people liked it so much that they were
donating and so Imgur survived for the first six months just purely on
donations."

~~~
hayd
Right... then they took VC $$$$$, over-hired and now they're not.

------
beager
I liked a lot of what Giphy was doing with TV show parsing and captioning, I
feel like that could be a huge vector for sponcon, but this announcement about
sponsored GIFs and ad sales sounds go generalized on its face that I'm not
sure it will be fruitful.

Is BMW going to buy sponsored GIFs? Is McDonald's? Are major CPG companies
going to buy sponsored GIFs? I think TV shows and major studios have a good
use case for this, but even if the sales are constrained to suitable markets,
and healthy, will those sales support a $600mm valuation, or even keep the
lights on?

Ad sales work well when you control a platform with a lot of eyeball-share,
and when you have strong profiling. I don't think Giphy will have much of
either, and if they do, I think the they won't have all of those attributes
available (i.e., giphy.com is hard to build facebook-level profiling on, but
is easy to control ad units on, GIF keyboards/facebook/various integrations
are high-eyeball, but someone else controls the profiling and you can't
control the ad units etc).

~~~
dave5104
Starbucks did this back in 2015: [http://www.adweek.com/digital/starbucks-
whips-21-branded-gif...](http://www.adweek.com/digital/starbucks-
whips-21-branded-gifs-starring-frappuccino-164691/)

I could see them being a clear buyer here. Some of the GIFs in that article
are clear, in-your-face ads, but some of the others are a bit more subtle...
yet still probably achieve Starbucks' ad goals.

As for Giphy reach... I use Giphy on Facebook Messenger, Discord, and probably
a few other places that I'm unaware of. They hook into a LOT of places.

~~~
InternetUser
"hook into a LOT of places" \- That optimism isn't well supported by
acquisitions and IPOs in recent years. I maintain that the "pop-culture-image
sharing" craze, which obviously includes gifs, hit its monetary-value peak
when Yahoo bought Tumblr in May 2013 for $1.1B. It's been more than 4 YEARS
since then, and what goin' on with Pinterest? I mean they are now 7 years into
their existence and have neither IPO'd nor been acquired. Meanwhile, Imgur
keeps chugging along--though downward, and since Reddit began hosting its own
images, Imgur's decline has only accelerated, as even the Google Trends
popularity graph reflects [0].

VIDEO is the future, and with AR, VR, and mixed reality on the rise (where the
Almighty Facebook's Oculus is actually 5th place in sales [1]), images and
gifs are looking about as exciting as innovations in the design of mobile flip
phones. Snap, with Snapchat, went public earlier this year, but I don't think
they ever could have done if they remained merely a _photo_ -messaging app,
rather than a photo- _and-video_ messaging app, as well as a news-publishing
app and now a TV app with its own proprietary programming.

[0]
[https://trends.google.com/trends/explore?date=all&q=imgur,re...](https://trends.google.com/trends/explore?date=all&q=imgur,reddit)

[1] [https://uploadvr.com/psvr-vive-superdata-
sales/](https://uploadvr.com/psvr-vive-superdata-sales/)

------
ejlangev
Good luck living up to that $600 million valuation with sponsored gifs before
running out of money. Seems they raised 55 on 300 in February 2016 and then 72
on 600 in October 2016. Seems like a lot of money to be burning for a gif
search engine.

~~~
nolok
> $600 million valuation

Holy moly, good luck with that ...

I think there is a place for a company like theirs, at a much smaller
valuation, running and making profits. But now that they took VC money on such
a high value, they're bound to do all the classic tricks to burn through money
keeping the illusion going ...

~~~
lazyjones
But if they only make $1/year profit on each of their 200M DAU, the valuation
is easily justified. I'm sure FB, Google make much more than that and I
haven't clicked on their ads for years.

~~~
rplnt
FB did over a $5/year on a monthly active user in 2016. But they (and Google)
are much better positioned at selling ads than a funny gifs engine ever could
be.

~~~
Sholmesy
These are still 200 million pairs of eyes every day on their product. VC
funding has looked like a joke recently, but 200million _daily_ users at $600M
doesn't seem ridiculous, regardless of how silly/bad the product is.

~~~
rplnt
But that's just users viewing content there, not interacting with the site at
all. I'm sure imageshack had those numbers, easily. Until something better
(read not monetized) came along to replace it for a while.

~~~
Sholmesy
You might be right. I've never thought of giphy as just an image hosting
platform though. It's more about the integrations with apps that is their
edge. Something imageshack/imgur never really nailed.

~~~
riffraff
but how is that integration monetizable?

The moment `/giphy cat` in slack returns sponsored content is the exact moment
people will disable it.

~~~
Sholmesy
Same.

But I think there are variations on this that work/make money.

`/giphy football` could return some relevant superbowl sponsored gif as one of
the first N gifs. Kinda like how google gives you 3 "relevant" ads before
showing you the actual search content. Start subtle, get more and more brash
as time goes and people won't notice. I guess making it work without people
leaving is the $600M question.

------
debacle
I'm almost certain giphy is already testing sponsored gifs, or someone is dark
patterning giphy's search engine. Every once in a while in slack, /giphy would
return a gif that was 100% an ad and 100% not relevant to the parameters
passed.

------
jdross
Maybe a wrong way to view this, but Google does ~1,200B searches per year,
market cap of ~650B.

Assuming giphy does an average of 2 searches / user / day, that's ~150B
searches per year. Put another way, 1/8 of Google search volume.

I think it's reasonable to believe the average Giphy search can eventually
monetize at > 1% of the average Google search query.

Especially if Gif searches sometimes have intent.

~~~
beager
I think that number one, your assumption about search volume is very hard to
ascertain: do they have 200mm DAU? MAU? Total users? What's the total search
volume per day? Is it ~450mm? Are all of those searches monetizable? Is the
revenue per search on par with Google's?

I think there are huge gaps to fill in before we can understand what the value
of monetized search on Giphy is vis a vis Google.

~~~
choward
Are you sure it's not just because it's impossible to find things so people
search more?

------
forkLding
I think a lot of people here are pessimistic about Giphy just because they
took on huge VC funding, but if Giphy can maintain and grow its user base and
be able to monetize and earn a profit of .5 dollars per user per yr, then it
would have earned 100M in profit. I know it will be hard but thats
entrepreneurship, its never easy

~~~
cwkoss
Giphy is such a useless product, I have trouble imagining them being able to
monetize for more that 0.10/user/year.

Not only is it a timewaster application (why would a business pay for
employees to use it), but it also does a poor job of search - its main selling
point. Baffling that anyone believes it's worth $600M.

~~~
boyce
Do you think the search problems are the barrier to their monetisation

because surely that's a problem money can easily fix

~~~
cwkoss
I think they could only solve their search problem by hiring an army of
minimum wage gif classifiers to curate the attachment tags and labels to each
gif.

That would make their search usable, but still not sure what the market for
gifs is. I don't see any good way to compel their end users to pay for the
service, and ads will fundamentally degrade the utility of the service even
further.

They've essentially built a poorly-functioning toy and are getting investors
as if they are a B2B SaaS service. What is their value-add? Is there any
economic utility in being able to quickly find a gif?

~~~
sbarre
> Is there any economic utility in being able to quickly find a gif?

Giphy gets used all the time in my company's Slack channels..

It's a morale thing I think (at least a bit).. People enjoy putting a bit of
fun into the work chat, in a way that's acceptable (in our office culture -
don't want to speak for everyone) and low-effort..

If Giphy was suddenly 5-10$/month (like RightGif is for example), I think my
company would gladly pay that to continue to let our employees use it during
their work conversations.

~~~
cwkoss
Fair enough. In my company's experience giphy only attaches a relevant gif
around 25% of the time, the rest of the time the gif is an odd non-sequitur.
Relevant and amusing gifs are probably closer to 5-10%.

We used it a bunch when we first moved to slack, but now we probably use it
less than once per day across the whole team. We'd turn it off without
hesitation if we had to pay for it.

~~~
sbarre
Yeah I guess it depends on your viewpoint. I definitely don't always get the
most relevant GIF but that tends to add to the joke in most cases.. ;-)

------
peteretep

        > If Netflix doesn’t buy ads against "chill"
    

I wonder if there's a potential issue with trademarks there. If "Netflix and
chill" becomes popular enough, does Netflix end up just being a generic word
for watching online TV?

~~~
maus42
I thought "watching" anything (or even having a Netflix subscription in the
first place) wasn't obligatory part of the activity "Netflix and chill".

~~~
kyle-rb
Related; Stallman said he wouldn't Netflix and chill, but he would agree to
watch some local video files.

[https://twitter.com/gexcolo/status/637383659318734849](https://twitter.com/gexcolo/status/637383659318734849)

------
dennyabraham
I didn't know this wasn't already in prod. On numerous occasions, I've seen
less-relevant gifs show up with an album link to a brand or product. It was
what I expected the justification to be for the poor accuracy of gif search.

~~~
QAPereo
Maybe that was a test run; otherwise it does seem downright bizarre, and I've
had the same experiences.

------
cocktailpeanuts
Do Giphy actually host Gifs anymore? I noticed how they make it very hard to
actually access the image version, and even this image is in webp, so you
can't embed it. It's all iframes.

This is not saying they're bad, I totally can relate with their need to cut
costs because just hosting these gifs for free and letting anyone <img src>
them is not a profitable decision, but then again, it's not really Gif
anymore.

So even in this case the "sponsored gif" would probably be some sort of a
video instead of an actual gif.

Nowadays whenever I want to search for a gif I want to use for a blog post or
website, I have given up looking for gifs on giphy and just go to google
search instead. The "gifs" on giphy are unusable for my purpose.

~~~
wodenokoto
Just like hoover or xerox, the would gif has transcended its "technical"
meaning, and today it simply refers to a looped video without sound.

~~~
cocktailpeanuts
I see your point but don't think it's an adequate analogy. Xerox still means
photocopy and Hoover still means vacuum cleaning. Gif is something that used
to exist for decades, not something giphy invented.

~~~
throwaway91111
Gif is far more useful as a media type rather than file format; and more than
that, i don't think most people realize or care that they're actually watching
some kind of video-sans-audio.

------
floatingatoll
Dear Giphy,

You know exactly how much each GIF served costs you.

Charge that to a balance I keep on file on my account, and add autopay with a
monthly spend limit. Let me indicate whether my GIF links should become
sponsored or should simply return 1x1 transparent when my balance for the
month runs out.

I don't want a "premium monthly fee" account, I want you to charge me S3
delivery fees + 15% markup for the privilege of dealing with S3 for me.

~~~
reustle
What if someone hotlinks your gif? Are you planning on using some kind of
domain whitelist? How would that work? I like the idea, I just think
enforcement is difficult.

------
kaikai
Half the fun of using giphy through Slack was the risk of getting an awkwardly
bad gif. Once there was a preview, folks in my Slacks stopped using it.

I use the giphy website a couple times a week, but the search is terrible.
It's my go-to choice purely because it's convenient, but there's no way I
would ever pay for the service. If other users feel the way I do, sponsored
gifs may be their only hope.

~~~
benburleson
I also find myself cancelling Slack giphys because the results are so
terrible, resulting in a constant decrease in usage over time.

------
khy
I interact with Giphy exclusively through Slack. Am I a daily active user?

~~~
Theodores
Me too, but I won't be /giphy if advertising comes along.

~~~
abraves10001
If the top result is advertised but still decent content and I still have the
option to shuffle, I don't think that would deter me.

------
cwkoss
200M daily users seems like a suspect number. For comparison, Slack reports 5
million daily users: [https://techcrunch.com/2017/06/15/slack-is-reportedly-
raisin...](https://techcrunch.com/2017/06/15/slack-is-reportedly-raising-
another-huge-500m-round-of-funding/?ncid=rss)

Seems like giphy is counting some things they shouldn't. If a giphy gets
embedded on the page, maybe they count every single impression of that gif as
a daily user?

I'd be shocked if anywhere near 200M people actually had accounts on the giphy
website.

~~~
tinus_hn
WhatsApp allows you to send gifs you download and search for on the Giphy
site. That probably accounts for a lot of users.

~~~
reustle
Facebook messenger as well

------
z3t4
The moment they replace a gif image with ads it will kill all that goodwill. I
do think _selling_ the gifs would work though. People (1) are willing to pay
_a lot_ for attention/be cool/social/funny. The strategy will be to purge the
Internet from gif images containing content from their partners, so that you
can only find gif images from their site.

1) I'm glad HN doesn't allow gif images in the comments. If you are reading
this you are probably not in the target group that might be willing to spend
money on gif images.

------
blizkreeg
We've certainly come a long way from when websites with gifs were annoying in
the early web days to where there's a company with a GIF raison d'etre and a
$600M price tag on it.

------
debt
I originally was picturing like a normal gif but with an opening, intro ad. I
think that's incorrect.

I think ad-sponsored GIFs will be more popular and more legal then any other
type of gif. I envision a future where we are all sending ad-company created
gifs to each other without even noticing that they're created by ad companies.

GIFs are so easy to make and so cheap, and they're used everywhere.

~~~
mcbits
> I envision a future where we are all sending ad-company created gifs to each
> other without even noticing that they're created by ad companies.

I thought something like that was already happening in the form of PR firms
producing contrived "reaction" GIFs with celebrities.

------
pmarreck
I wonder how this will interact with them being sourced by Facebook's gif
functionality, which has already broken a few times in the past month or 2,
requiring you to physically go to Giphy's site to get a working link to the
gif that you can paste manually in a Facebook comment

------
dboreham
Google can't index GIFs???

~~~
nolok
I think it's a clear case of using "can't" to say "doesn't bother to because
it's not worth it". In fact, I wouldn't be surprised that Google had great
indexing of GIF already, but doesn't fully expose it in its search engine.

~~~
MikeFez
Their keyboard (Gboard) has GIF searching functionality already - so it's
certainly something they've implemented.

[https://itunes.apple.com/us/app/gboard-a-new-keyboard-
from-g...](https://itunes.apple.com/us/app/gboard-a-new-keyboard-from-
google/id1091700242?mt=8)

------
dzhiurgis
Worst imaging site if you’ve got autoplay disabled.

------
sAbakumoff
I anticipate Giphy Movie to be released on our lifespan.

