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How Giphy Is Turning Six-Second Videos Into Seven-Figure Ad Deals

The five-year-old startup hasn’t been firmly “pre-revenue”–until now.

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BY Christine Lagorio-Chafkin - 08 Jun 2018

How Giphy Is Turning Six-Second Videos Into Seven-Figure Ad Deals

PHOTO CREDIT: Getty Images

There comes a time in many venture-funded startups' lives when the phrase "pre-revenue" rolls off the tongue a bit too easily. It's been uttered for too many years.

Giphy, the New York City-based cross-platform library of animated gifs, is in some ways still a scrappy company. It has fewer than 100 employees spread out across multiple cities, so no office feels gigantic. It allows employees to experiment with pet projects, such as producing an animated gif picture frame, or a gif printer.

But as the largest search engine for six-second videos online--one that boasts 10 percent of the search traffic of Google--it's also getting big. Its rapid growth has been supported almost entirely from round after round of venture capital funding--a total of $150 million.

The capital infusion gave Giphy considerable room to grow, reach more users, and build the world's largest short-film library. In early 2016, Adam Leibsohn, Giphy's chief operating officer, referred to making money as something Giphy shouldn't yet be "spinning our wheels doing."

Since the last portion of that funding came in late 2016, however, Leibsohn and Giphy have changed their tune. "We see visual communications as the future of the way we all talk, and a way to make everyone more expressive and fun," Leibsohn told Inc. "Now, can it be a business?"

Quietly over the past two years, Giphy has been building out a creative studio in Los Angeles. It has stocked its internal creative agency with 20 employees who have begun to work with brands to create custom gifs, for uploading to Giphy. The work provided a bit of revenue, and a way to test the waters on formal partnerships with major brands. Now the company is turning some of those creative partnerships into lucrative advertising deals, by allowing brands to pay to promote their gifs with common search terms on Giphy's hugely popular site and mobile app.

"The Holy Grail for a brand advertiser is to be able to directly and uniquely align with the brand value," said Leibsohn (pictured in the gif below), who spent eight years in sales research and market strategy prior to joining Giphy in 2014. "If you stand as a brand for 'joy' or 'fun,' Giphy is uniquely positioned to promote it through paid search--then suddenly people are using your content to express the very emotions you stand for."

 

In part, Giphy is catching up to the work brands have already been doing themselves or with outside agencies. Television networks and shows, such as ABC's The Bachelorette, run vibrant channels within Giphy. Last fall, Converse worked with the Brooklyn-based agency Big Spaceship and 13-year-old Stranger Things star Millie Bobby Brown to upload to Giphy 32 emotion and back-to-school gifs.

 

"There are a lot of brands using Giphy organically, like Nike and automakers, and a lot of people are making actually good content," said Alex Magnin, Giphy's head of revenue. "That was a signal to us that it's a good time to make a proactive effort to convert the brand use into an advertising business."

Giphy has been testing paid alignment with popular search terms for the past six months, and is now officially opening up the service to new customers. They can be the classic emotive searches for reaction gifs such as "mind blown," or tied to specific events such as Mother's Day, the Super Bowl, or National Doughnut Day (Dunkin' Donuts purchased the last).

Absolut Vodka has filled its channel on Giphy with gifs around popularly searched themes, such as "happy birthday," "new year's eve," "happy," "cheers," "party," and holidays such as "new year" or "Halloween." It can pay at anystyle="position: absolute;"hin those searches.

 

Leibsohn would not give specific terms of any given brand's agreement, but said its initial work with companies such as Gatorade, Dunkin' Donuts, and Pepsi has generated six- and seven-figure deals.

Ads on Giphy are differentiated with an #ad hashtag, and are often branded in the bottom corner, such as in this campaign with Neil Patrick Harris for Pepsi's new seltzer product, Bubly Water. They are only shown and distributed through Giphy's site and app--any third-party integration, such as with Snapchat, does not contain ads. (Brands of course already create gifs and stickers, so the boundary is a little slippery.) Once a campaign ends, content can remain on the Giphy site--though its placement in search would resume bestyle="position: absolute;"its fellow humble non-ad gifs.

 

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