Kik's Next Big Play: An Animated GIF Messaging App

Booming startup buys Relay after raising $38.3 million

Kik bought Relay, a messaging app based on GIF giving.

The GIF has a future in mobile advertising, especially within messaging apps, according to Kik. The messaging startup, which just raised $38.3 million, has purchased Relay, a GIF-based messaging app that fits into its ad plans.

Kik says it has 185 million registered users, a base that includes 40 percent of U.S. youth between the ages of 13 and 24, according to the company. Kik announced its money raised from venture capitalists and its Relay acquisition today.

Relay is a small but growing app with 700,000 users, said its co-founder Jon McGee. The app is all about short, looping GIFs that users share with each other, and it's a format being embraced by more and more advertisers.

"GIFs are video advertising perfectly adapted for the mobile environment," McGee said. He did not reveal how much Kik paid for his company.

Kik, co-founded by Ted Livingston and Chris Best, is turning its youth-obsessed app into a marketing machine with at least 25 brands using its Promoted Chats ad product launched in August.

Brands like Skullcandy and Aeropostale and media companies like Vice and Funny or Die use Kik to message with fans and pay for Promoted Chats to reach a wider audience. Messaging is a tricky environment for advertisers because of how personal the communication is, and a number of marketers struggle with what to say.

However, even Snapchat is getting into advertising and media distribution, and it has been showing video ads since last month.

Kik is looking to get more visual with Relay, which could be a key part to future advertising products. The GIFs and short video—on apps like Instagram and Vine—already are popular with marketers.

"We're definitely thinking about video and video advertising," Best said. "Kik is definitely getting more visual and rich media is going to be a really compelling trend in messengers."

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