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.
Despite being called "GIFs" they are actually delivered as videos (as is often the case today) - still, the money obviously is going to have to come from something else than pure hosting.
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).
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.
I see McDonalds integrating Giphy into a larger ad campaign. Let's say they launch a campaign around happy moments with family. That gives them scope to includes moments from the TV or cinema spots as featured results when someone searches for a happy or family gif, which the user is more likely to do because they're aware of the campaign. That user then shares the campaign to friends on social media who may not be television watchers.
Or consider the next Minions movie. They just animate and render a bunch of Minions acting out the top Giphy search terms (subtly tagged 'Despicable Me 4'), and suddenly the movie is being organically promoted by thousands of users.
Some of the HBO ones from Silicon Valley had to be sponsored. If they weren't they're missing out for sure. Definitely, think tv shows and movies are the way to go here. A McDonalds gif just doesn't feel right. Almost all of my friends just share clips with captions from shows.
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.
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 ...
And for a really bad one. It's more of a gif aggregator that can give you gifs of approximate themes. But I very rarely find a specific gif I want and I know it exists.
How can giphy with its current functionality possibility cost that much to run? I feel like it should be able to run for over a century with the amount that it has in the bank right now. Bandwidth is cheap and it's not exactly compute intensive or labor intensive.
I could distribute that thing across a global cluster of VPSes with cheap bandwidth (Vultr, Digital Ocean, OVH) and host it for peanuts. Given that it's drowning in VC money my guess is that it's all at AWS, not using S3, and over-engineered to Juicero levels. They're probably using Kubernetes, a dozen different database and message bus protocols, and a whole sprawling Rube Goldberg machine of a microservices architecture to... host gifs.
... and yeah that nose candy valuation is ludicrous. There is no way.
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.
> Especially if Gif searches sometimes have intent.
...they do? I'm not sure I've ever seen a Gif posted that was not a pithy reaction to a conversation. Seems kind of hard to come up with meaningful context from "spongebob nope".
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.
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
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.
This is a mere personal anecdote so it doesn't mean much at large, but I'm pessimistic about the advent of sponsored {thing} not necessarily with Giphy. To me this is just another %thing% that advertisers have leached a tentacle into for the sake of getting me to buy something.
I get it, it's the game we play now with content that is ostensibly or otherwise "free", pandora's box is open but the internet has become such a frustrating place for me personally every time I see "Sponsored tweet" or "sponsored post" or "sponsored ________" that tries to blend itself into the rank and file of non-sponsored content I would otherwise enjoy.
I'm hoping it will bring better search functionality, but the search will probably still suck plus ad gifs pasted throughout. Their search functionality has autocomplete as if it might know what you're looking for. The results are typically mediocre though. So here's hoping that they use the ad money wisely to improve the search algo.
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?
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.
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.
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.
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.
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.
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.
> If a giphy gets embedded on the page, maybe they count every single impression of that gif as a daily user?
This wouldn't surprise me in the least. But, if they can turn a reasonable number of those impressions into sponsored impressions, it's kind of beside the point.
Although doing the numbers, 5% paid impressions on 200M daily impressions at $5 CPM is only $50K daily or $18.25M yearly...
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.
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.
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.
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
Part of it also is that Giphy has licensing agreements with media rights owners to create gifs based on their content . . . they're not just indexing existing gifs.
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.
[+] [-] anilgulecha|8 years ago|reply
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.
[+] [-] detaro|8 years ago|reply
[+] [-] downandout|8 years ago|reply
[+] [-] spyder|8 years ago|reply
Uh, they are using WebP and MP4, how is it terribly un-optimized?
[+] [-] beager|8 years ago|reply
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|8 years ago|reply
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.
[+] [-] flashman|8 years ago|reply
I see McDonalds integrating Giphy into a larger ad campaign. Let's say they launch a campaign around happy moments with family. That gives them scope to includes moments from the TV or cinema spots as featured results when someone searches for a happy or family gif, which the user is more likely to do because they're aware of the campaign. That user then shares the campaign to friends on social media who may not be television watchers.
Or consider the next Minions movie. They just animate and render a bunch of Minions acting out the top Giphy search terms (subtly tagged 'Despicable Me 4'), and suddenly the movie is being organically promoted by thousands of users.
[+] [-] dawnerd|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] ejlangev|8 years ago|reply
[+] [-] nolok|8 years ago|reply
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 ...
[+] [-] DiThi|8 years ago|reply
And for a really bad one. It's more of a gif aggregator that can give you gifs of approximate themes. But I very rarely find a specific gif I want and I know it exists.
[+] [-] pryelluw|8 years ago|reply
[+] [-] tomjen3|8 years ago|reply
[+] [-] api|8 years ago|reply
I could distribute that thing across a global cluster of VPSes with cheap bandwidth (Vultr, Digital Ocean, OVH) and host it for peanuts. Given that it's drowning in VC money my guess is that it's all at AWS, not using S3, and over-engineered to Juicero levels. They're probably using Kubernetes, a dozen different database and message bus protocols, and a whole sprawling Rube Goldberg machine of a microservices architecture to... host gifs.
... and yeah that nose candy valuation is ludicrous. There is no way.
[+] [-] debacle|8 years ago|reply
[+] [-] jdross|8 years ago|reply
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.
[+] [-] travisjungroth|8 years ago|reply
[+] [-] awj|8 years ago|reply
...they do? I'm not sure I've ever seen a Gif posted that was not a pithy reaction to a conversation. Seems kind of hard to come up with meaningful context from "spongebob nope".
[+] [-] beager|8 years ago|reply
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.
[+] [-] mertd|8 years ago|reply
Not too sure about that. I don't search for gifs of anything I want to buy but I certainly google some of them.
[+] [-] throwaway91111|8 years ago|reply
[+] [-] dexterdog|8 years ago|reply
[+] [-] forkLding|8 years ago|reply
[+] [-] cwkoss|8 years ago|reply
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.
[+] [-] iamdave|8 years ago|reply
I get it, it's the game we play now with content that is ostensibly or otherwise "free", pandora's box is open but the internet has become such a frustrating place for me personally every time I see "Sponsored tweet" or "sponsored post" or "sponsored ________" that tries to blend itself into the rank and file of non-sponsored content I would otherwise enjoy.
[+] [-] noxToken|8 years ago|reply
[+] [-] peteretep|8 years ago|reply
[+] [-] maus42|8 years ago|reply
[+] [-] dennyabraham|8 years ago|reply
[+] [-] cocktailpeanuts|8 years ago|reply
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.
[+] [-] floatingatoll|8 years ago|reply
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|8 years ago|reply
[+] [-] kaikai|8 years ago|reply
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.
[+] [-] khy|8 years ago|reply
[+] [-] Theodores|8 years ago|reply
[+] [-] cwkoss|8 years ago|reply
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.
[+] [-] flashman|8 years ago|reply
This wouldn't surprise me in the least. But, if they can turn a reasonable number of those impressions into sponsored impressions, it's kind of beside the point.
Although doing the numbers, 5% paid impressions on 200M daily impressions at $5 CPM is only $50K daily or $18.25M yearly...
[+] [-] tinus_hn|8 years ago|reply
[+] [-] z3t4|8 years ago|reply
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|8 years ago|reply
[+] [-] debt|8 years ago|reply
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|8 years ago|reply
I thought something like that was already happening in the form of PR firms producing contrived "reaction" GIFs with celebrities.
[+] [-] pmarreck|8 years ago|reply
[+] [-] dboreham|8 years ago|reply
[+] [-] ldd-|8 years ago|reply
https://www.wired.com/2016/05/giphy-wants-all-the-gifs/
[+] [-] nolok|8 years ago|reply
[+] [-] pjc50|8 years ago|reply
[+] [-] dzhiurgis|8 years ago|reply
[+] [-] sAbakumoff|8 years ago|reply