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Where do Americans go to buy and sell online?

You wouldn’t need much research as with around 50 billion page views per month, Craigslist leads the classifieds market with no competitor coming even close.

Started in 1995, Craigslist’s business model was designed to be a not for profit model but was soon transformed into a for-profit model in 1999. The company though started as an email distribution list in 1995, made the most out of word of mouth marketing and has currently positioned itself as a synonym to online classified.

But before we get on to answer how Craigslist makes money, let us first understand the business model of Craigslist and how does it work.

What is Craigslist?

Craigslist is a region-specific online classified website with sections devoted to jobs, housing, personals, services, community, gigs, resumes, discussion forums and more. Most of the advertisements on Craigslist are free to post however they do charge for some advertisements depending on the region and the type of the classified.

How does Craigslist Work?

Craigslist, just like other classifieds platforms, operates by listing advertisements in sections relevant to the users. Advertisements are listed based on region and category to avoid confusion and to be relevant for everyone.

In recent years, classified adverts have evolved into a whole new domain. They are no more a newspaper specific advertisements. Advertisements on craigslist have a longer life, are location specific and searchable, and can be accessed by people all over the world in just a few clicks. The best advantage of advertising on Craigslist over native newspaper classifieds is that it’s (mostly)  free and can be easily targeted and modified.

How Does Craigslist Make Money?

How exactly does Craigslist make money when it lets you post classifieds for free?

Well, this company with the peace symbol as their logo has a perfect revenue model which was included in its business strategy accidentally. The company started charging money for certain listings of particularly competitive categories ($25  for job postings in San Francisco) in 1998 to avoid spam and to cover website costs. However, this strategy to earn money seemed fruitful to the owners and many listings were made chargeable to earn more profits.

Eventually we realized we were making a lot of money and it was more than we needed to just cover costs. – A former Craigslist employee

Here’s a list of the paid listing to answer your question of how does Craigslist make money.

The repost cost in most of the listings is less than the posting cost.

How Much is Craigslist Worth?

Craigslist is a private company and has never raised a penny from investors. Therefore, its value can only be assumed. However, with almost $700 million of revenue and a profit margin of 80% in the year 2016, Craigslist can be valued at around $3 Billion.

Craigslist is the most profitable classified website in the world. One of the reasons for its success is its ‘network first, profit later’ strategy. Many companies like Whatsapp, Facebook, and Quora also followed this strategy to reach the top.

Future of Craigslist

Craigslist –

• Survived the Dot Com Bubble.
• Decimated the newspaper classified Industry
• Never changed its interface drastically
• has around 55 million monthly visitors
• has no plans to change its operating model.

This company is as unpredictable as one can be. While other companies try to keep their profit low so as to gain customers, this company earns a whopping profit of 80%. Craigslist doesn’t market itself, doesn’t believe in changing the business model according to the business environment and is still leading the industry just because of its simple and selectively free interface and a huge network which it built in 2 decades. But this can also prove out to be a reason for its brand failure in future.

Competitors like OfferUp and LetGo have all the plans and strategies to leave Craigslist behind. The chief competitor, OfferUp, has a valuation of 1.2 billion, offers a Pinterest-style photo feed, is also available as a mobile application, and is spending millions in the marketing of its brand. Similar is the case with other competitors like LetGo and Facebook Marketplace. Craigslist would not last long with its current business plans. It has to amend its business and operating model to remain at the position it is at today.

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There was a time when sending money overseas used to be a huge problem. But in 1998, PayPal brought a revolution in the money transferring habits of users globally. Today, with a reach in around 202 countries, this company helps 197 million users transfer money all over the world. But before answering how does PayPal make money, we have to understand PayPal’s business model and how does it operate first.

PayPal, which started as an online payments solution, has now transformed itself into a powerful financial tool that allows you to –

• Save and access your debit and credit cards through PayPal user ID and password – PayPal is a digital wallet which saves the details of your debit and credit cards and let you shop and transfer money online by just remembering your PayPal user id and password.
• Checkout at websites with just one click – Paypal has launched its new technology ‘One Touch’ which saves your PayPal login details securely in your device and lets you check out on a website without even typing your PayPal username and password.
• Transfer money to and from a bank account or Paypal account – You can transfer money to 202 countries and in around 100 currencies through PayPal. The same money can be deposited to bank accounts in 56 currencies or can be held as a balance in PayPal account in 25 currencies.
• Receive payments through PayPal (Payment gateway) – You can sell products online and offline and receive money through Paypal. All you need is a PayPal business account. PayPal initially gained popularity when it was included as a payment gateway at eBay.
• Get a PayPal debit card – PayPal’s debit card works just like any other bank’s debit card. You can use your PayPal debit card to shop online and offline, withdraw money, and earn rewards on your purchases. PayPal debit card is linked to your PayPal account.
• Enjoy benefits of PayPal credit (no interest credit) – Originally named as Bill Me Later, Paypal credit is a feature which lets you get a no-interest credit of $99 or more if the amount is paid in full in 6 months.
• Get PayPal business in a box business solutions – Set up your business online with PayPal business in a box tools.
• Get a working capital loan – this is one of a kind daily payable loan helps you to fulfil daily business operation needs at a less fee.

How does PayPal make money?

PayPal is not just a fin-tech company, it’s a revolution in the digital money market. PayPal, though not a bank, provides features which are not less than any bank. Money transfer, Debit cards, credit cards, loans, payment gateways, and digital wallet are few of the many services provided by PayPal.

eBay made the decision of its life when bought PayPal for $1.5 Billion in 2002 and included it as a checkout option in its interface. Though not an eBay subsidiary anymore, but PayPal has never looked back since then. The company has many revenue sources and one has to dig deep into the business model of PayPal to answer the question of ‘How does PayPal make money?’.

PayPal Revenue Sources

Transaction Fees

There are two types of accounts on PayPal – Personal & Business.

With a personal account, you can send and receive money online from family or friends and pay for goods you’ve bought online or offline through your debit card, credit card or through your PayPal balance. However, PayPal charges a fee (different for different countries) on the amount when you send a personal payment using a debit, credit card, or PayPal credit.

Business accounts are for merchants who use PayPal services to sell their goods online. They pay a fee of 2.9% plus $0.30 USD of the amount they receive on the sale. However, this fee is reduced with an increased amount.

There’s no withdrawal fee. However in certain cases, if you want to withdraw money in the form of the check, you have to pay a fee of $1.50.

International Payments

PayPal charges fees when you receive payment from a different country. The charges include currency conversion cost (if a different currency is used) and the international payment fee. Fees vary for different currencies.

Business Account Charges

Registering an individual or business account on PayPal is free. However, some special features and services like customized checkout page and same site payment are provided only to users who buy the Payments Pro business account of PayPal. The cost of payments pro account is $30 per month.

P2P payment withdrawal fees

PayPal.me lets you receive money directly through a custom link. However, PayPal charges you when you withdraw the same. The charges in the USA are 2.9% plus $0.30 USD of the amount received.

Interests from money deposited

The money kept as PayPal balance is deposited by the company in liquid investments which earn interest. The interest is a source of revenue for PayPal and is not shared with you.

Payflow

Payflow is the payment gateway service provided by Paypal. Payflow can be integrated into a website by anyone using a merchant account.

There are two plans which give different levels of customization for the online checkout pages:

• Payflow link: The free plan where the customer enters the payment details on a page hosted by Paypal.
• Payflow Pro: The premium plan which gives the user the ability to design his own checkout page. It is priced at $25 per month.

No matter what the plan is, Paypal charges a $0.10 gateway fee for credit card payments.

Besides this, the company also provides three optional features. These are:

• Fraud protection
• Recurring billing
• Buyer authentication

PayPal Working Capital Fee

As the name suggest PayPal working capital is a small loan for your working capital needs. You can borrow up to 15% of your last 12 months of PayPal sales, up to $85,000, with a fixed fee and no interest. PayPal working capital works a bit differently than a traditional loan. Instead of the monthly payment, payments are made on a daily basis as a percentage of your sales. The interest is replaced with a fixed fee. The amount of fixed fee is dependent on the percentage of daily sale alloted. The larger the percentage of the daily sale you choose to allocate towards repayment, the lower the fee.

Business in a box

PayPal provides all in one business solutions in association with Xero and Woo Commerce. With business in a box, you get huge benefits on Xero and Woo Commerce services. PayPal, however, earns an affiliate commission through this.

Debit Card Withdrawal Fees

PayPal users also get the benefit of anytime money but at a cost. The company charges a fee every time you withdraw money by using the debit card.

PayPal Credit Interest

You don’t have to pay for the credit as long as it is $99 or more and you pay it fully in 6 months. However, for all other conditions, PayPal charges an Annual Percentage Rate (APR) of 19.99% starting from the posting date (which is usually within a few days after the purchase date).

PayPal Here Fee

PayPal Here is an offline payment solution provided by the company. It’s a mobile application (and a card reader) which lets you accept payment from all types of cards with the ease of PayPal.

Other sources of Revenue

Paypal owns many other companies like Braintree, Xoom, and Venmo etc. which add to the revenue sources of the company.

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If you’re reading this and are not from a remote island, I bet you must have heard the name McDonald’s. One of the biggest reasons McDonald’s has been able to conquer the fast-food market is because of its franchise-based business model.

More than 80% of its restaurants worldwide are owned and operated by franchisees. That is, even though those restaurants operate by the name of McDonald’s, serve McDonald’s products, and adhere to its standards, they are not operated by McDonald’s.

But what does franchise mean? How does it operate? What are its types?

Let’s find out.

What Is A Franchise?

A franchise is a licence granted by a party (franchisor) who owns the brand to an individual or a corporate (franchisee) to access their business proprietary knowledge, process, trademarks, and to sell products or provide services under their name within a territory or a region.

A franchisee gets a licence to access the following –

• To operate under franchisor’s brand name
• Usage of franchisor’s trademarks
• Operation manual
•  Marketing support from the franchisor
• Software and other operational requirements
• All other proprietary knowledge and materials.

What Is A Franchise Business And How Does It Operate?

A franchise agreement requires two parties. A franchisor and a franchisee.

A franchisor is the owner of the brand with decent goodwill who is looking for opportunities to expand which require less investment and his involvement.

A franchisee is someone ready to invest and buy the rights to use the name, trademarks, and business processes, and sell the products of that existing business which has decent goodwill. A franchisee is not an entrepreneur who starts a business from scratch but a smart businessman who buys the right to sell products of a business which has well-developed goodwill and demand.

The franchisee and franchisor can be a natural or artificial person. That is, they can be an individual, a partnership firm, an LLP, or a company.

How Does A Franchise Business Operate?

The operating model of a franchise business is simple. A franchisee buys the rights to use the franchisor’s business proprietary knowledge, process, trademarks, and to sell products or provide services under the franchisor’s name.

The licence has a cost which is known as the licence fee (franchise fee). The licence fee amount depends on the scale and goodwill of the franchisor’s brand and demand for their products. Apart from the licence fee, the franchisee is also required to pay an ongoing royalty fee, which is paid as a percent of gross sales to the franchisor.

A franchisee is required to run the business according to the operations manual and the franchise contract. Special training and operational guidelines are provided to the franchisee by the franchisor. The franchisee is required to maintain standards set by the franchisor for quality, visual merchandising (if applicable), products, prices, offers, etc.

Role Of The Brand In Franchising

The whole franchise business model revolves around a brand. A franchisor builds a brand which the customers buy. The franchisee buys the licence to use operate the same brand name in a particular region and sell the standardized products of that brand. The market is set, and it’s a win-win situation for both the franchisor and the franchisee. Franchisor gets to expand the reach of its brand and revenue earning sources without involving much monetary and non-monetary investment, whereas the franchisee gets the benefit of existing demand of the brand’s products. Franchisee also benefits from the marketing efforts led by the franchisor as it’s the brand which marketed and not one store.

Types Of Franchising

Product Distribution Franchise

Under this model, the dealers are given the right to distribute the brand’s goods. This model is similar to the manufacturer-retailer model. However, the franchisee must pay a fee or buy a minimum amount of products to obtain the right to sell the trademarked goods. Typically, the franchisees sell only the franchisor’s products, but there are some agreements where they have the choice to sell only certain products of the brand which they feel will be profitable to them.

The product distribution franchise model was started by Singer and Coca-Cola to sell their products in the 19th century. Coca-Cola, Ford, and Exxon still offer this type of model to their franchise partners.

Manufacturing Franchise

This franchise model involves the franchisor’s granting of manufacturing and selling rights to the franchisees. Franchisees, however, are required to sell the goods under the trademark and name of the franchisor’s brand. The manufacturing franchise model is common in the food and beverage, clothing, and automobile industries. Examples include Coca-Cola, Hyundai, Nestle, etc.

Business-Format Franchise

The business-format franchise model is an evolved version of the product distribution model. Here the relationship between the franchisee and franchisor is more complete than the product distribution model. The franchisees not only sell the franchisor’s products under the name of the franchisor’s brand, but also follow the standardized format and procedures of retail sale, which include visual merchandising, the appointment of staff, implementation of marketing activities, etc. In return, they get operational and marketing assistance from the franchisor.

The business-format franchise model is the most common franchise model today. These partnerships are seen in every industry, be it fast food chains like Mcdonald’s, Burger King, etc. or other retail chains like Nike, Bose, etc.

What Is A Master Franchise?

In a master franchise agreement, the franchisor grants rights to the franchisee (master franchisee) to control the franchising activities of the brand (like appointing sub-franchisees) within a specified geographical area. The master franchisee usually has exclusive business rights to the specified territory. There isn’t any competition, interference or distraction from other players selling the same brand’s products, which eventually leads to easier and better ROI for them.

Why Franchising Is A Safer Alternative To Starting A Business From Scratch?

Buying a franchise is a safer investment than starting a business from scratch, as the franchisee gets the benefit of:

Existing Market And Demand

A franchisor has already invested much time and money in creating a market for their product. The brand has already positioned itself in the minds of the customers. A franchisee, by buying the franchise licence, gets the benefit of selling products which have existing demand in the region. It’s because of the existing demand of the brand that the franchisee is able to attain break even a lot earlier than he would have attained if he had started his own business from scratch.

Set Operational Process

The operating model of a brand is standardized and the franchisee has to adhere to the set standards. This prevents the franchisee from committing mistakes he could have committed if he had started his own business.

Less Risk

The risk involved in starting a franchise business is less than compared to starting a new business. The franchisee is already aware of the financial investment involved, competitors, opportunities and threats and only starts this business if he feels that he’ll benefit from it. He can take many precautionary steps like conducting research before starting the business in that area.

Why Franchising Is A Better Option For Companies To Expand Their Business?

Starting and operating a new branch to expand the business involves a lot of time and financial investment. The franchise business model helps the brand to expand without these limitations. The brand earns through licence fees and monthly/quarterly ongoing royalty fees from the franchisee. The franchise business model even lets the brand reach places which would have been difficult for them otherwise.

Top 10 Global Franchises

After getting an answer to your question of ‘what does franchise mean?’ you must be curious to know the top 10 global franchises or some of the best franchise examples. Here’s the list of the best global franchises.

Rank	Brand	Headquarters	Industry
1	McDonald’s	Oak Brook, Illinois	Fast Food
2	KFC	Louisville, Kentuck	Fast Food
3	Burger King	Miami, Florida	Fast Food
4	Subway	Miami Springs, Florida	Fast Food
5	7 Eleven	Dallas, Texas	Retail Convenience Store
6	Hertz	Estero, Florida	Rental & Leasing
7	Pizza Hut	Plano, Texas	Restaurants
8	Marriott International	Bethesda, Maryland	Hotels
9	Wyndham Hotels and Resorts	Parsippany, New Jersey	Hotels
10	Hilton Hotels & Resorts	McLean, Virginia	Hotels

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A Q&A platform where your questions get answered by real humans; Quora’s business model is distinguished and is designed to stay in the market for very long.

Founded in 2009 by two former Facebook employees, Adam D’Angelo and Charlie Cheever, Quora is a questions and answered powered social media network with an estimated valuation of over $2 billion.

The startup still is growing at a 3 digit growth rate with the sole motive to generate the database of high-quality answers to questions asked by millions of its users.

But if you’re still unaware of what this giant is and how it works, here’s a brief –

What Is Quora?

Quora is a question and answer social media networking portal powered by user generated content where questions are asked, answered, followed, and edited by Internet users.

The company has positioned itself as an internet forum dealing in almost all the niches that exists.

Quora Business Model

Quora’s business model can be considered to be a mix of Facebook’s and Google’s business model.

It’s similar to Facebook because all of the content that’s there on the platform is user-generated. Moreover, the users also have the option to like, dislike, and share the content.  

It’s similar to Google in a way that the platform uses its own proprietary search and ranking algorithm that ranks the answers based on relevance that will increase the user experience.

Who Are Quora’s Customers?

Ever since the start, Quora operated on a two-sided user-generated questions and answers model. Hence, its target market is divided into two segments –

• People who ask questions: They include curious internet users who are tech-friendly so as to use the website’s interface.
• People who answer questions: They include subject experts and scholars from across the world.

How Quora Works?

Quora is an ordinary forum with an extraordinary relevance algorithm and an exceptional userbase. The company witnesses over 100 million monthly unique visitors where 82% of the users use a smartphone to visit the platform.

The company work in a way similar to other social media channels. The content is generated by users and others are available to view and read. However, it requires the users to login to the platform to post or vote.

The questions are automatically categorised under the appropriate topics called spaces that can be followed by the users. 

Moreover, just like Facebook and other social media networks, Quora also provides a personalised homepage-feed based on the user’s interests and activities on the platform. 

Quora’s Revenue Model

Started in 2009, Quora initially had no revenue earning source and actually survived on the venture capital it raised in the 4 rounds of fundings. Nevertheless, its valuation kept on increasing and Quora was valued at around $1.8 billion after its series D funding of $85 million.

How Does Quora Make Money?

Just like any portal with a huge database of users and their interests, Quora has started earning money through advertisements. Started as a beta test by showing advertisements from limited advertisers, advertisements are now a lot more common on Quora.

Quora has tried to incorporate ads in its revenue model better than others as it focuses on relevant ads from relevant advertisers. Ads are incorporated within the Quora revenue model so well that they look like a part of it.

You can find advertisements on the homepage as well as on the forum pages. The price that Quora charge for it is usually influenced by how many advertisers bid for the spot.

Types Of Ads On Quora

Just like other networks, Quora also provide a wide range of marketing and advertising solutions to businesses. These include –

Text and Image Ads

Text ads were originally the only ad format used by Quora. It is still among the most used ad format as it fits perfectly within the answers.

Image ads, however, gives the advertiser an opportunity to stand out and even showcase the company logo alongside the ad image and caption text.

Business Profiles & Promoted Answers

Promoted answers are long-text form advertisements that lets the advertisers share detailed information about their offerings in a more engaging manner.

This helps the advertisers to establish thought leadership, grow top of the funnel awareness, and even execute their inbound marketing strategies.

Usually such promoted answers are written by brand accounts which are called business profiles by Quora. Such business profiles are, again, a paid feature offered by the company as it has a strict rule of using original full names for the accounts for the free users.

But, there are also cases where the brands use famous faces (brand ambassadors, employees, etc.) to write promoted answers on behalf of the company.

Advertising Solutions By Quora

Quora is at par with other social media channels when it comes to advertising. The company provides solutions where an ad can be targeted based on –

• Context: Ads on content that’s relevant to specific topics, keywords, or questions.
• Audience: Ads targeted to audience that match web traffic, lookalikes, or contact lists.
• Behaviour: Ads based on user interest.

Moreover, the bidding on such ads is also as per the prevalent trends –

• CPM: Cost per thousand impressions, to increase the impressions on the ads.
• CPC: Cost per click, to get most visits on the landing pages.
• CPA: Cost per action, to get most conversions.

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Launched in 2010, Instagram brought a revolution into the online photography industry and normalised image and video sharing on social media as we know it today.

The company was bought by Facebook for around $1 billion in cash and stock in April 2012. But unlike its other acquisitions, Facebook planned to build and grow Instagram independently as a separate platform targeting Gen Z.

That being said, Instagram’s revenue model is still connected to that of Facebook’s and almost all of the money is generated through advertisements.

But before we discuss how Instagram makes money, it’s important to understand Instagram’s business model, target audience, and its business strategy.

What Is Instagram?

Instagram is a photo and video sharing social networking platform owned by Facebook. The platform allows its users to capture, edit and upload photos and videos through its mobile application, follow other users, and interact with other users using like, comment and chat feature.

The platform is used by both individuals and companies alike to connect with their audiences.

For users, the company has played a central role in the 21st century pop culture, where popular users are dubbed as influencers.

For businesses, the platform acts as an important marketing platform to build their brand awareness, interact with their customers, and even sell products.

Instagram Stats

• Monthly Users: 1 Billion
• Daily Active Users: 500 Million
• 34% of Instagram users aged between 25 to 34; 31% are aged between 18 to 24
• 51.2% users are female and 48.8% are male
• 75% of US 18-24-year olds are Instagram users

Instagram Business Model

Instagram’s business strategy is unique and evolving. Ever since its inception in 2010, the business model is quite the same – a free image sharing mobile application, but the way it uses its algorithm to monetize users’ attention has evolved over time.

Just like Facebook, Instagram requires users to create a profile to connect with others. Once logged in, the user has access to features like photos and videos upload, photos and videos filters, followers, geotagging, self-disappearing stories, live stories, IGTV, etc.

According to eMarketer, users spend an average of 26-minutes per day on the Instagram app

And 91% of them use Instagram to follow at least one of their interests.

This makes the platform a perfect spot for brands to advertise and sell their products, and which is precisely how Instagram makes money.

How Does Instagram Make Money

Instagram is a mix of visual storytelling and influencing. Around 70% of shopping enthusiasts say they turn to Instagram for product discovery. Most even use the platform because of their FOMO. That’s why brands love it as much as the users.

In fact, in a recent survey by Ipsos, 66% of people said they use Instagram because it enables them to interact with brands.

The platform successfully uses this interaction to make money through –

• Advertisements
• Shopping

Advertisements

Advertisements brings in the most revenue for Instagram. In fact, it is predicted that Instagram will bring in around 40% of ad revenue to Facebook by 2021. According to Business of Apps –

• Cost per click (CPC) for Instagram feed ads is around $0.60, and for Stories $0.50
• Cost per mille (CPM) for Instagram feed ads is $1.65, and for Stories around $0.90

According to a recent blog by Instagram itself, over 2 million advertisers advertise on Instagram every month.

They decide to advertise in the following formats –

Story Ads

Stories on Instagram are ‘day moments’ of individuals and businesses presented in a slideshow format that self-destroys itself after 24 hours.

Instagram stories ads pop up in between two story slides and includes additional engagement features like visiting a website, answering a poll, giving feedback, etc.

Photo Ads

Photo Ads are just like usual photo posts on the platform but with a sponsored tag and a call to action button.

Video Ads

Video ads are similar to photo ads but are in the form of up to 120 seconds long landscape or square format videos with a call to action button.

Carousel Ads

Carousel ads are an extension to traditional ads where the user can swipe to see additional photos or videos in a single ad.

Collection Ads

Instagram’s collection ads include swipeable carousel display of product images below a cover image or video.

Ads In Explore

Instagram’s explore page is a source of real-time content curation that presents different posts for every user from accounts they don’t follow yet based on their likes and interests.

Ads in explore are used by brands to target audience with discovery mindset and generate awareness.

IGTV Ads

IGTV is a vertical long video platform that runs on user generated content. It is almost like YouTube or TikTok but has a different positioning than both.

However, Instagram monetizes this platform just like YouTube – through ads; and sharing the revenue with the creators.

Shopping

Since Instagram has also positioned itself as a discovery platform just like Pinterest, it has also copied some of Pinterest’s revenue earning strategies as well – the shopping feature.

Instagram Shopping is a set of features across Instagram that let people shop your products directly from Instagram.

In simple terms, Instagram Shop lets you integrate your product catalog with your Instagram profile. With Instagram Shop, you can –

• Add a Shop tab within your profile that allows visitors to see all your products without leaving the Instagram app.
• Add and tag Shop products in your posts in the same way you would tag a friend.
• Promote your product in Instagram Stories.
• Run an Instagram Shopping ad.

The company makes money with shopping in the following ways –

• The Checkout Fees – Instagram lets customers to buy the product on the Instagram app itself. It, however, charges a fee from the sellers for the same. This is how checkout works –
  • Brand creates a shoppable post;
  • User clicks on its product tag;
  • This opens a product page inside the Instagram app;
  • The user can view images, read descriptions, and browse similar products;
  • The user clicks on “Shop Now”, “Add to Cart”, “Check out now” to buy the product right in the app.
• Instagram Shopping ads – These are extension to the traditional ads with a tagged product that can be bought either on Instagram or on other channels.

The Future Of Instagram

Instagram is a prime example of the rise social shopping. Facebook understands the bleak future of traditional advertising and has smartly introduced new advertisement and shopping features within the Instagram application which has a great future because it is, in fact, paving the way for future discovery and shopping experience.

The launch of IGTV and positioning it as web TV is a great strategy to get users engaged while the company make money with user generated content.

Instagram has also given way to the influencer revolution which has developed a network effect competitive advantage for the platform which will be hard for any brand to break, be it Google or Snapchat.

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Even with over 150 million monthly users and a valuation of $600 million, Giphy’s business model is still in its growth stage and the company hasn’t started earning money yet. The operating model of Giphy is a lot different from that of its competitors which has opened up many new and different revenue generation opportunities for this search engine.

How Giphy works?

Content looks better when in motion. Text and images works great for telling stories but sometimes you need to make them in motion for users to experience them. Motion content have two categories – Videos and Gifs. Videos, due to its duration and other factors, require a sort of commitment from both the creater and the audience. Whereas GIF is an art. GIFs are an addictive and hilarious sequence of images, compiled together to create a short, looped animation.

These short animations are on the rise ever since these were integrated in social networking websites like reddit, tumblr, etc. where they were used as reactions and replies.

Giphy was launched in 2013 as a search engine dedicated only to GIFs. The founders, Alex Chung and Jace Cooke, collected around 15000 gifs when they started the website. Today, Giphy delivers over 1 billion GIFs daily to over 100 million users who spend over 2 million hours to watch those GIFs.

2016 was a great year for GIFs and Giphy. Facebook, being the world’s biggest social network lent its audience to Giphy and other GIF hosting websites when it started the GIF integration by letting users share them through links.

Memes also come in the form of GIFs and Giphy, being a GIF warehouse, has seen many new users visiting just for them.

A google for shareable GIFs which lets you search for, share, and download GIFs. But this is not just how Giphy works. Giphy has now evolved into a suite of GIF- based products like – video to GIF converter, GIF keyboard, and enterprise tools which help media companies turn their content into GIFs.

Operating model of Giphy is different from other search engines. Giphy doesn’t redirect its users to third party websites. Gifs are found and can be downloaded, shared and embedded from Giphy itself. However a link is provided to the website where the image is hosted.

How Giphy makes money?

The world’s biggest search engine of GIFs hasn’t monetized its services yet. Unlike its biggest competitor, Imgur, Giphy has no plans yet to earn money through promoted posts.

Giphy’s operating model is a lot different from that of Imgur. Unlike Imgur, which is a image sharing and hosting service provider, Giphy is a search engine and according to Adam Leibsohn, the chief operating officer at Giphy, they do have plans to make money like other search engines.

“So we have a search query and a search result. And we are the biggest search engine inside of messengers that anyone has ever built. And so we are a big search engine, you can look at other search engines about how money gets made.”

As Giphy doesn’t own the right of the images, it cannot generate revenue from licencing or selling them. The only option left is to earn money by showing sponsored results to the search queries of the users just like what google does.

Giphy has partnered with (and is open to partner with) many big brands and artists who showcase their content in the form of GIFs. The main motive behind these partnerships is to get more brands (and their fans) on board which will later pay for putting their content at the top of the search results.

Giphy doesn’t charge brands and artists to open up a brand channel though.

The company currently has less than 100 employees and is able to meet its expenses because of huge amount of funding it had received till now.

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