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Giphy: The Business Model and Revenue Generation


Giphy is a search engine for animated GIFs, short, looped video clips without sound that are often used in social media and messaging applications. Giphy allows users to search for and share GIFs with others. It also provides tools for creating and editing GIFs.

Key Takeaways

  • Giphy is a company that provides social media and messaging platforms with animated GIF images that users can embed in posts and messages.
  • These platforms license the use of Giphy for its users. Giphy additionally seeks to capture advertising revenues.
  • The company has not reported any positive revenue yet to date, although it has raised tens of millions of dollars in venture backing.
  • Facebook bought Giphy for a reported $400 million in May of 2020.
  • As of April 2023, the U.K government ruled against the acquisition with Meta and ruled Giphy must unwind from Meta.

History of Giphy

Giphy was founded in 2013 by Alex Chung and Jace Cooke, who decided to compile a database of GIFs that could be used in place of words to express feelings. The database and the number of users have grown significantly, with as many as 700 million users accessing more than 10 billion GIFs per day as of April 2023.

In 2014, Giphy raised $17 million in a funding round led by venture capital firm General Catalyst, and began expanding its library of GIFs to include a wider variety of content. The company also launched a feature that allowed users to create and share their own GIFs at that time.

Over the next few years, Giphy continued to grow and attract more users. In 2016, the company raised an additional $72 million in funding, led by Draper Fisher Jurvetson. Giphy also formed partnerships with companies like Twitter (now X) and Facebook which integrated Giphy's library of GIFs into their platforms.

Meta Inc., as Facebook's parent company is now known, liked the service so much it bought Giphy in May of 2020 for a reported $400 million and to roll it into its Instagram and Messenger platforms. However, due to potential antitrust violations, the two companies have been ordered to "operate as separate businesses", and the Meta/Giphy deal has been blocked. The full implications of unwinding the acquisition are still unraveling s of April 2023, though the U.K. government ordered Meta to sell Giphy.

Understanding GIFs and Giphy

For users of Facebook, X, and other social media messaging sites, GIF images have become ubiquitous, and are increasingly used as a form of expression. For example, instead of using the Internet slang "LOL" for "laughing out loud," a user could attach a GIF video clip of someone laughing hysterically.

GIF is an acronym for Graphics Interchange Format, a popular bitmap image format introduced by CompuServe in 1987. Now, Giphy is taking GIFs mainstream with its massive searchable database that attracts tens of millions of people each month. As GIFs grow in popularity among social media users and advertisers, Giphy enhances the social media experience by allowing users to more creatively express themselves through GIFs.

How Giphy Works

The use of GIFs in social expression piggyback on the popularity of emoji characters, which are used to express whatever feelings a person might be having at the moment. Many of the GIFs that appear in social media are soundless, looped video clips of a character or scene from a TV show or movie, which can be much more expressive and dynamic than an emoji.

Users search for a GIF using a keyword and then choose from among the resulting images. They can copy and paste the image into a text message or share it on social media. Giphy recently came out with a mobile application for easier access on smartphones and tablets.

Giphy has also grown on the content creation side of the business. For example, individuals and businesses can now create their own GIFs on the Giphy website, which provides artists with tools to create dazzling GIFs with animations or video footage. Artist creations can be viewed on the site's art gallery.

Giphy also has a Giphy CAM app that lets users make their own GIFs with video footage recorded with their smartphone cameras. Users can easily upload footage to the site, where Giphy provides desktop tools for creating the GIF, and then seamlessly share their creations anywhere.

In 2015, during the promotion of the latest Star Wars movie The Force Awakens, Giphy partnered with Disney to add a filter in the desktop tools that causes Star Wars ships to fly around in a video. Although no money exchanged hands for that particular arrangement, it becomes a little clearer how Giphy expects to generate revenue going forward.

The U.K. government has ruled against the acquisition of Giphy and has stated Meta must unwind its acquisition of the company. As of April 2023, the status of the acquisition is not yet finalized in either direction.

How Giphy Makes Money

Giphy hasn’t generated any revenue to this point as it does not charge any money for the use of its apps nor utilizes an advertising model. The company is currently operating off the $150 million venture capital funds raised since inception. When acquired by Meta in 2020, Giphy was given a private valuation of $600 million.

In a 2019 interview with Digital Trends, the company founder shared, "the future is about Giphy bringing short-form entertainment into messaging." With 700 million daily visitors, Giphy has plans to expand into multiple platforms, including a video platform.

There are a number of ways Giphy can leverage its platform for revenue. Giphy allows brands to sponsor their own GIFs and promote them in search results. This modern form of advertising helps brands increase their reach and engagement with users for a fee. In addition, Giphy offers a range of branded content services. Brands and companies can use these services to create unique, engaging content that resonates with their target audience.

Giphy provides an API that allows developers to integrate its library of GIFs and videos into their own apps and platforms. Developers can license the API for a fee which provides Giphy an additional stream of revenue. Last, Giphy has partnered with a number of companies to expand its reach and offer additional services. For example, it has teamed up with Instagram to allow users to share GIFs directly in Instagram stories.

What Is the Difference Between a GIF and Giphy?

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A GIF is an acronym for a popular bitmap image format. Giphy is a company that hosts GIFs that are used by millions across the world each year. Giphy helps enable users of popular social media platforms to express themselves using GIFs.

How Much Does It Cost to Use Giphy?

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Giphy accounts are free and let you upload to the site. With an account, you can also save all of your uploaded files and save your favorited GIFs in one location without a fee.

Who Owns Giphy?

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In 2020, Meta purchased Giphy. However, the acquisition was met with severe competition issues with some entities stating there would be an undue conflict with the two companies merging and preventing fair access and options for consumers. As of 2023, the U.K. government has ruled the acquisition must be unwound, though the acquisition is still being legally reviewed.

The Bottom Line

Giphy is an online search engine and platform for sharing animated GIFs and short video clips. The platform allows users to search for and share content through its website, mobile apps, and various social media platforms. Though recently acquired by Meta, the acquisition is still under review for unfair competition.

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