Analysis: Why Facebook dished out US$400m for GIPHY

 Facebook has acquired GIF-maker GIPHY as the social media giant aims to further integrate its GIF library into Instagram. Several media outlets such as CNBC and TechCrunch reported that the social media giant dished out around US$400 million for GIPHY which first established itself as a search engine for GIFs in 2013. In a blog post, Instagram’s VP of product Vishal Shah, said following the acquisition GIPHY will continue to operate its library (including its global content collection) and users will still be able to upload GIFs; developers and API partners will continue to have the same access to GIPHY’s APIs; and GIPHY’s creative community will still be able to create content.

Meanwhile, Facebook will be looking to invest further in its technology and relationships with content and API partners. According to Shah, 50% of GIPHY’s traffic comes from the Facebook family of apps, half of that from Instagram alone. By bringing Instagram and GIPHY together, Facebook aims to make it easier for users to find the GIFs and stickers in ‘Stories’ and ‘Direct’.

“GIFs and stickers give people meaningful and creative ways to express themselves. We see the positivity in how people use GIPHY in our products today, and we know that bringing the GIPHY team’s creativity and talent together with ours will only accelerate how people use visual communication to connect with each other,” Shah explained.

However, Facebook has had its fair share of scrutiny over the years, which has led to concerns about privacy for many GIPHY fans. Moreover, GIPHY has worked with numerous social sites such as Facebook, Twitter, Reddit to make its GIFs available to users. One company which has partnered with GIPHY over the years is cross-platform messenger service Signal. Its co-founder Moxie Marlinspike took to Twitter to address the concern about GIPHY search in Signal, and assured that Signal uses a privacy preserving approach to prevent GIF search providers from receiving user data. 

https://twitter.com/moxie/status/1261342005658935297

Speaking to Marketing, Charanjit Singh, managing partner at Construct Digital said that at this point, given GIPHY's API does not collect user data other than search terms, Facebook will only get better insights into what is trending.  According to Singh, Facebook should leverage this acquisition by spotting trends, and provide similar original GIFs on its platforms to raise visitor stickiness. He also said with changes to the way a GIF is delivered, Facebook may be able to plant a cookie which will give it access to more user behaviours across other platforms, ultimately leading to better targeting and reach for its advertising, albeit still a conjecture.

"I don’t think individual data will be compromised in the near term but in the longer term Facebook could change how the APIs work and connect up with its cookies - giving its teams access to understand how users behave on platforms outside of its current control. It’s hard to tell at this point, but the public is wary," he was quick to add. 

Jeffrey Lim, founder and managing director of marketing agency 8traordinary said while he is not able to predict if privacy will be a concern just yet, the situation needs to be monitored nevertheless. “As of now, the GIPHY API used across different platforms can only see a user's search terms and not his/her data, so from a data privacy view point, it’s still pretty safe,” he added.

However, this could change if Facebook changes the way how GIPHY works in the near future.  Seeing the journey of Facebook’s acquisition of Instagram, and its subsequent cross into its user bases, followed by the introduction to Facebook and Instagram ads, there is a potential of such being introduced to GIPHY in time to come. “What might be interesting is also the ability to introduce both images, words/ search terms into the equation for advertisers if this was to be implemented,” he said.

Loke Weng Leong, founder of LOKi jumped in to add that Facebook already takes much of user data, as such there will not be much of a difference as to why GIPHY’s acquisition might spark more privacy concerns. However, he added that it would definitely give brands and agencies more insight to do better work.

Loke also explained that Facebook will gain a more complete picture of its uses and the world out there. Through this acquisition, he believes that the social media giant will improve conversion rate and help with its targeting, as well as the proficiency of the business. “Facebook might also build tools around GIPHY and creative GIPHY-based campaigns. They might eventually do sponsored GIFs too. We always advocate clients to set up a GIPHY account and create a few GIFs together with a campaign. It’s free anyway,” he said.

Edge over competitors, if any?

In addition, Singh was also of the view that the acquisition definitely gives Facebook a look into how GIFs are being used across specific platforms. This will give them real insight into user patterns across these competitors. "Alternatively it may even allow it to curtail its use on some competitors but I expect Facebook will be prudent about such hostile action," he added.

Meanwhile, Lim said if Twitter and Snapchat continues to allow GIPHY on their platform, this would mean that Facebook (with GIPHY) would be one of the first social media platforms to be able to provide users with cross-platform usages (just like what it did with Instagram a few years ago. "For a social media platform, it’s about user base and daily usages, and this would also mean that Facebook would continue to be a platform that is not just relevant but also in demand in the years to come," he said, adding:

From a content format platform, GIF is something of high value to the youths and Millennials.

Loke, on the other hand, said Facebook is at a huge advantage as GIPHY is the largest depository of GIFs online. GIF usage is now being normalised and some have even replaced emojis.

“Facebook is also able to get plenty of insight into the usage of GIPHY, such as what people search for. Facebook will be able to catch something that is trending on other platforms and pick that up too,” he said, adding:

GIFs are used to show sentiments and emotions, and brands will also be able to detect patterns of sentiments.

“This will definitely make competitors very uncomfortable, and require them to make big decisions – do they cut GIPHY off or build their own community? In this case, competitors would eventually have to find an alternative to source for GIFs,” Loke added.

This acquisition comes hot on the heels of Facebook's new "Messenger Rooms" function. Taking on Zoom head-on, Facebook users will now be able to create a room right from Messenger or Facebook, and invite anyone to join their video call  - even if they do not have a Facebook account.

According to a press release, unlike Zoom's time restricted free rooms, Facebook's Rooms can hold up to 50 people and will have no time limit. Users can also start and share rooms on Facebook through their News Feed, Groups and Events. Messenger Rooms is said to roll out in some countries this week and will expand to the rest of the world in coming weeks. Facebook also said it will soon add ways to create rooms from Instagram Direct, WhatsApp and Portal, too.

Other features that Facebook has launched include a virtual date option on its Facebook Dating platform, as well as expanding its child-friendly video and messaging app Messenger Kids to more than 70 countries. Messenger Kids is currently available in Southeast Asian countries such as Singapore, Malaysia, Indonesia, Thailand, Cambodia, and Vietnam.

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