Jan 3, 2018 - Economy

Tenor taps media companies to build a business out of GIFs

A Champs Sports sponsored GIF via Tenor's mobile keyboard. Source: Tenor

Four-year-old startup Tenor is trying to capitalize on the rise of GIFs — short looping videos — by letting media companies sell sponsorships of its GIFs to their own advertisers. Tenor tells Axios that its 300 million users now perform 10 billion monthly searches and the company serves "billions" of GIFs every day.

Why it matters: Startups like Tenor are vying to build big businesses out of short videos. And with GIFs' exploding popularity in messaging apps, it's often pitted against its main rival, Giphy.

Tenor flipped the revenue switch in September for standard GIF sponsorships, and recently began allowing select media companies, including PopSugar and Rockyou, to sell GIF sponsorships to their own advertisers for a revenue split. It's a way for Tenor to grow its top-line without expanding its direct sales team, and is the first step in building out a wide-ranging ad platform with self-serve tools, programmatic ad buying, etc.

  • Tenor charges brands between $100,000 and $500,000 for sponsored GIF campaigns. Advertisers include AT&T, Wendy's, Nissan, and Domino's.
  • Champs Sports recently purchased sponsored GIFs as part of an ad campaign it distributed through one of Tenor's media partners, Whistle Sports. In the first two days of the campaign, Champs' GIFs were shared more often than the minimum Tenor promised, according to Michael Davis, Whistle Sports' VP of branded content and marketing.
  • Dunkin' Donuts, which was introduced to Tenor by a marketing vendor, also saw above average results for its sponsored GIFs campaign this past Halloween, generating more than 23 million impressions (every time a sponsored GIF showed up as a search result) and hundreds of thousands of organic shares, according to Dunkin' marketing exec Aimee Van Zile. Its top GIF, a ghost cartoon, had a share rate of 4.93%, well above the typical 1% rate for Tenor's sponsored GIFs. Three others had share rates above 2%. The company came back for a holidays-themed campaign and plans to consider Tenor's sponsored GIFs for additional campaigns in 2018.

Tenor charges advertisers when their sponsored GIFs are shared instead of when they're viewed, arguing that searches and shares are better indicators of if the ad has actually been viewed.

  • Tenor says that users made 10 billion searches in November for GIFs via its mobile keyboard and integrations into apps like Facebook Messenger, iMessage, and Twitter, up from 9 billion in September.
  • The company also says it has 300 million users who search and share GIFs via its apps and integrations, up from 200 million last spring.
  • Meanwhile, rival Giphy says it has 300 million daily users, who share two billion GIFs per day, the company told Fast Company in October. However, it appears the companies define their active users differently, with Giphy counting any user that interacts with its technology to access GIFs.

Tenor's long-term vision is to build an advertising marketplace, akin to Google's AdSense, says co-founder and CEO David McIntosh. And just like Google, it needs to build a search engine that spits out the best matches.

  • Tenor's GIF search engine often competes with rivals like Giphy in outside apps, thus increasing the value of search. Only 20% of Tenor's GIF searches come through its own iOS and Android keyboards and apps, the company told Forbes.
  • Tenor has been working with major Hollywood studios and TV networks to amass GIFs, as McIntosh doesn't believe that creating content or providing agency services would be scalable models for his company.
  • Search may be vital to GIF business viability, but superior content can still sway consumers.

The story has been updated to show that Tenor serves "billions" of GIFs every day.

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