Giphy plans to test sponsored GIFs to boost monetization

Brief:

Giphy, the online database and search engine for looped image animations, is said to be planning a test of sponsored GIFs as a way to monetize its service. That means sponsored GIFs may appear among other images in the search results of desktop and mobile users, TechCrunch reported, citing an unnamed source.
In some ways, sponsored search results may resemble Google's manner of featuring relevant ad links alongside the list of search results, per TechCrunch. Giphy didn't confirm a timeline to introduce sponsored GIFs, but COO Adam Leibsohn told TechCrunch that the company has shifted focus from growth to building ad products.
Giphy has 200 million daily active users for its website and application program interface (API) that lets developers incorporate the GIF library into their apps, including Apple's iMessage and Facebook Messenger. The platform has about 250 million monthly active users, which means the most of its users are interacting with the service every day.

Insight:

Giphy has ample opportunity to sell sponsorships, especially to film studios and broadcasters whose video clips are frequently transformed into GIFs that people share on social media and messaging platforms. While people tend to search for clips that convey a particular emotion or reaction rather than a specific brand, advertisers could sponsor a GIF that has a positive association with their brand. For example, a GIF that portrays hunger could find sponsorships from restaurant chains or snack brands. Just this week, sneaker brand Converse enlisted "Stranger Things" start Millie Bobby Brown to create 32 GIFs evoking the many different emotions kids feel heading back to school.

The animated images also have the ability to generate viral publicity as people share them with friends and followers at a high volume. Giphy appears to be taking a page out of Snapchat's book, with its sponsored filters frequently shared among friends, making them more likely to be watched by users than direct ads from an advertiser.

Giphy's website also draws traffic among people who may not be seeking a specific GIF, but are curious to see what's trending online. More than 50% of people who visit the company's site are there to browse, Giphy told TechCrunch. The company could leverage that kind of consumer behavior and sell native ads on its site to brand marketers, as people watch more than 4 million hours of GIFs on the platform every day, according to Business Insider. In addition to creating GIFs for broadcasters and studios, the company also has the ability to "live-gif" major events like awards shows for timely content. Giphy now creates those GIFs for no charge, but could develop licensing deals at some point to monetize those events.

In 2015, the company rolled out standalone app Giphy Cam, which lets users quickly create their own GIFs. And though this type of peer-to-peer native content brings about an unclear vision of its role in the advertising mix, Giphy has become an ingrained part of the way consumers communicate on mobile.