If you haven’t heard of Giphy, it’s a business run by Alex Chung which creates GIFs – essentially short videos for social media, designed to communicate a feeling or emotion rather than tell a story.
They give away their product, don’t have any active monetisation on the site and have no confirmed strategy to do so shortly. They have also just taken on a new round of funding, totalling $74 million, which brings their total funding to approximately $150 million, on a market valuation of $600 million.
Unsurprisingly, this has left many in the tech community feeling like investors know something they don’t, and for once there is good reason. Giphy doesn’t require users to sign up before selecting a piece of content and has no methodology for gleaning additional information from users. Additionally, it has no existing advertising, which while this offer relative freedom from a user experience standpoint, also presents some concerns as to exactly how the business could structure a consistent revenue stream.
At a recent event, Chung had a surprising, albeit innovative answer. He pointed to the ongoing evolution of instant messaging, specific to mobile platforms. Discussing the symbiotic relationship between messaging platforms and social media, Chung said he sees Giphy as the potential conduit between businesses and consumers. He sees an opportunity for businesses to advertise using conversations between friends, which sounds like a great idea until you consider that if this is the evolution of marketing, businesses will be eager to glean relevant information from conversations, such as keywords, and present advertising in line with that.
If that sounds unthinkable, allowing your mobile phone to track your movements was the stuff of science fiction nightmares only a few short years ago, and now a vast majority of users leave location services switched on.
Chung also said that if Giphy were to introduce advertising on their site, it would be through sponsored search results, or GIFs created by businesses, designed to gain a measure of virility. This is a far more likely scenario, with many organisations still struggling to jump the digital hurdle, and Snapchat yet to produce one compelling case for B2B marketing. While GIFs in their current form are unlikely to have any significant impact in this area – most rely on humour or some form of savage insight into a current event – with cinemagraph technology maturing at a rapid rate, and the opportunity for organisations to combine the instant gratification of short-form media with punchy and entertaining calls to action, there is a chance that Giphy could and up being a valuable business tool.
Meanwhile, Alex Chung is happy with the current state of affairs, and stated categorically that the lack of plans to monetise the business is intentional. And with solid expansion numbers, and investors seemingly more than happy to throw money at Giphy, there is no reason to overcomplicate the business with pesky income.