Olivia Parker
Jul 15, 2019

Giphy's Alex Chung: Why advertisers love branded GIFs

The founder and CEO of the phenomenally popular search engine for GIFs started monetising his business last year in the US—and has plans to extend sponsored GIF slots to the rest of the world.

“We’re the only platform...that can get your advertising into messaging.”

As value propositions go, Giphy’s—as outlined by founder Alex Chung, speaking to Campaign at Rise, the tech conference in Hong Kong—is a solid one. Private messaging and stories are the future, Facebook’s Mark Zuckerberg declared in March, and Giphy offers brands a back door into the conversations that are happening there via GIFs, silent video clips that users can search for in messaging apps like Tinder and Facebook Messenger and insert to liven up their exchanges.

People now search and send 7 billion GIFs per day using Giphy, a number that’s doubled every two years, explains Chung. Giphy GIFs reach some 5 billion people a day, more than Twitter and Snapchat combined, and more than 25% of Instagram Stories now also contain a GIF.

Think of GIFs, and you think of clips of animals or babies doing funny things (both genres are personal favourites of Chung’s) when you search for a term like ‘fail’ or ‘oh no’ to include in a message. But Chung’s 125 employees, all of whom are based in the US, also work hard to generate new GIFs every day. They must be relatable, expressive and in tune with societal hot topics, Chung says: key moments from major sporting events (such as the below clip of Novak Djokovic, Wimbledon champion), movies and political speeches all get turned into GIFs as they happen.

“We learned that the GIFs that people are sending in conversation really had to do with culture,” says Chung. “Content has to be about culture and it has to be short. YouTube videos are five minutes long on average—it’s too long. No one’s watching YouTube videos on messaging. You have to make your content short enough to fit within a scroll.”

Giphy even turns ads into GIFs; during the Super Bowl, for instance, when debate about the world’s most valuable ad spots goes through the roof. Making GIFs of the Super Bowl ads, such as the 2019 spot by Bumble, below, featuring Serena Williams, helps plug the “disconnect” between people watching the spots on TV and instantly wanting to discuss them on social media, says Chung. “We do the small version, the 6-second version that people can start talking about. So during the Super Bowl, all of the advertisers who are out there, we work with most of them to multiply their effect in conversations as people are talking about these commercials.”

Advertisers are easily persuaded, Chung reports. “The best case is always when one of the executives at a brand, someone texts them a GIF of their own brand as a way to express themselves. That always wins. They’re like ‘OK, I get it.’”

Giphy hasn’t been making money in this way for long. Until recently, it was supported by continued rounds of venture-capital funding. Chung, a serial startup entrepreneur, launched Giphy in 2013 as “a fun way to look for cat GIFs and send them to my friends”, and then scaled it following Google’s business model when he realised how popular it was.

Like Google, Giphy is a search platform, but users search there for feelings and expressions to use in conversations, rather than web pages. People only use 1% of the words in the dictionary when they search on Google, Chung’s analysis found, leaving what he interpreted as “99% of words that no one searches for" up for grabs. No one looks on Google for ‘hungry’, for instance, but they do look for it on Giphy because they like being able to express this sentiment using more interesting means than words. 'Hello' and 'how are you' GIFs see a huge spike in the mornings, apparently.

Searches in Giphy now amount to around 15% of the number of searches on Google every day, making the company the second largest search engine in the US.

Giphy started officially selling ad spots to brands in the US in June 2018, letting them put their own branded GIFs at the top of searches for keywords that match their 'brand sentiments'. Specially made Snickers GIFs, for example, could be found at the top of the search feed when people typed in 'yum', 'yummy', 'chocolate', 'tasty' or 'nom', among other terms, during the period the brand advertised with Giphy.

Giphy started its own creative agency in Los Angeles to develop content for brands, and around half of the marketing brand work it has done, for companies including Target, Pop Tarts and Macy’s, is created in-house, Chung explains. 

Unlike ads on open social platforms like Instagram, which can suffer when people feel their once purely creative environment is becoming overrun with sponsored posts, Chung points out that people were already sending GIFs created by content owners before the company started to get paid for them.

"When we do ads and put ad disclosure we have really high engagement. If the content is good, the ad will perform just as well or better than all the other ads. If you make good content, of course we’re going to keep it in our database."

GIFs can work for less mainstream or traditionally creative brands, too. Giphy ran a successful creative trial for the US tax preparation company H&R Block some years ago. “No one searches for them but during tax day in the US everyone gets their tax return back. We made a bunch of ‘make it rain’ GIFs for H&R Block and so for that one day they had millions of views and they became cool.”

Any brand that has a strong message can benefit from partnering with Giphy, Chung states.
“The movement is now more away from performance and clicks to authentic messaging. Your brand really needs to say something... digital is the first [place] where instead of making that purchase or buying that clothing or brand to wear, if I can use it digitally to express myself first and I agree with the sentiment, then slowly you see the brand presence move into actual purchase and lifestyle.”

Giphy ads are only offered in the US at the moment, but Chung's whole team is now focused on building revenue, and he says Europe and Asia are the next targets. He plans to copy the model that’s working well already in America, but says the company will be extra cautious about getting ad content and infrastructure right in multicultural Asia, particularly in China. “If we launched in China right now it would probably crush everything we’re doing because of the amount of people using it every day,” says Chung.

Well-placed to have a stab at predicting the future of messaging and communication (see video above), Chung says he thinks that more and more entertainment and service providers will start to join Giphy in private conversations, edging closer to China’s hugely successful WeChat model. He's surprised, in fact, that more companies haven't yet come into the shortform communication and entertainment sphere. "The opportunities are there," he states: "I'm hoping companies will come and disrupt us...and then give me a job." 

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