Popular messenger app Kik, which hosts a colossal 185 million users, revealed it had snapped up GIF messaging firm Relay on Wednesday for an undisclosed sum. Additionally, the company secured a $38.3 million round of Series C funding, which it will use to invest in new-product development and expand its engineering and business-development teams.
Relay will discontinue its service on December 15 and its tech will be rolled into Kik.
“Chat is the core application of the smartphone era,” Kik co-founder and CTO Chris Best told AdExchanger. “Messages are the gateway to mobile, not just for usage and eyeballs, but also for commerce and general product discovery.”
Kik has already tried to monetize via a feature called Promoted Chats, Best said, and is looking to do more in the future. Its partners include ad platform Adaptly, retailer AERO, online comedy site Funny or Die, the magazines VICE and Seventeen, and headphone manufacturer Skullcandy.
While Kik plans to build more advertising products, Best said it first needs more resources. That said, the Relay acquisition is a clear signal of where Kik’s monetization strategy may be headed.
“We believe the GIF is the advertising format of the future,”said Relay co-founder Jon McGee.Since GIF files are small and play on a continuous loop, he added, they could be packaged to advertisers as the perfect mobile video format.
When asked if Kik might offer something like promoted GIFs or advertiser-sponsored GIF messaging through Relay, the company declined to comment, but conceded that the Relay acquisition gives it all the pieces it needs to make that happen.
“When we started Relay in 2012, we saw how Instagram caught on relative to Facebook by having a much more visual feed,” said McGee. “We wanted to do the same thing in the messaging space by creating a more visual messaging experience.”
“There’s been a lot of talk about mobile video being a really important ad format,” he added. “If you believe that video is a key medium for advertising in the future, and if you also believe that messaging is the native communication channel on mobile, then there’s a really interesting opportunity here at the intersection of messaging and video.”
Best pointed out that WeChat, a Chinese mobile text and messaging system developed by Tencent, is basically building a commercial empire on the back of its chat network. “When you go to WeChat, you can hail a cab from your messenger, you can buy insurance, and you can even can refinance your mortgage,” said Best. “They’re very much in a position to be the arbiters of the whole mobile space.”