How Does Funny or Die Make Money?

Thanks to star power and eager advertisers, the comedy website is laughing all the way to the bank.

Mar 15, 2014 at 10:30AM

It appears President Obama believes laughter really is the best medicine.

The administration's HealthCare.gov got a big shot in the arm last week after President Obama appeared on Funny Or Die's Between Two Ferns program to plug the heath care website.

It seems to have worked: Roughly 24 hours after a video was posted Tuesday morning, more than 13 million people watched the interview and some 54,000 of them heeded the president's advice and checked out the government-run insurance exchange HealthCare.gov, making the comedy site the highest source of individual traffic referrals to the federal health insurance marketplace, a White House official said.

It's easy to see why the president would go to the website to tout the health care program. Funny or Die (FoD) gets 20 million unique visitors a month and has 7.8 million followers on Twitter and 5.5 million likes on Facebook. White House Press Secretary Jim Carney told reporters:

The President's interview with Zach Galifianakis on Between Two Ferns was designed to reach Americans where they live. And they watch the show in huge numbers -- I think the average video gets something like 6 million views. I'm convinced we're going to break that average.

It doesn't hurt to have Will Ferrell on staff

The comedy site was launched in April 2007 by venture capital firm Sequoia Capital and a Hollywood production company whose principals include Will Ferrell, Chris Henchy, and Adam McKay.

Sequoia funded FoD with an $18 million Series A and $15 million Series B rounds. The site hasn't raised venture funding since 2008, but other investors include Creative Artists Agency and Time Warner (NYSE:TWX) subsidiaries HBO and Turner Broadcasting.

The privately held site is profitable, but principles won't say just how profitable. According to Wall Street Journal sources, the website's revenue grew 40% to 50% in each of the past three years, to a projected $40 million in 2012, with profit expected to be in the single-digit millions.

That makes FoD quite the outlier. Being a profitable entertainment company on the Web has been an elusive trophy for many. For example, Walt Disney's (NYSE: DIS) interactive unit lost money for 12 consecutive quarters and recently laid off 700 employees, about a quarter of its workforce.

So what does FoD do differently?

The winning formula, according to CEO Dick Glover, is: keep the cost of content and marketing low, keep the quality high.

On the content and marketing side, FoD keeps costs down by producing everything produced in-house. The small team of writers, directors, producers, and editors churns out upwards of 20 to 25 videos a month. 

And while other online video companies settle for serving up content on YouTube, depending on the Google-owned giant for traffic, promotion, even monetization, FoD is different, relying primarily on direct traffic to its site. This allows the site to retain all of its advertising revenues.

On the quality side: The site has undeniable star power. Celebrities line up to star in video goofs such as "Justin Bieber After the Dentist," "Undercover Karaoke with Jewel," and "Lindsay Lohan's eHarmony Profile." But the celebrities are paid little or nothing.

The ace up the FoD sleeve, however, is branded entertainment. Companies such as Under Armour (NYSE:UA), Starbucks (NASDAQ:SBUX), and Subaru, are now coming to Funny or Die to pitch their products. The writers create branded entertainment, generating a new revenue stream for the site and an entire new genre for marketers.

Insiders told The Hollywood Reporter that branded campaigns can run from $100,000 to $900,000, depending on how many videos are created and other criteria. Those fees include salaries for staff and payment to the stars.

So far, branded entertainment has been a successful strategy for the website. FoD's direct traffic has certainly made the site alluring to stars looking to let their hair down and advertisers who want to amp up their cool ratio. It remains to be seen whether other video websites will be able to replicate that success. And whether they'll be able to snag President Obama for an interview.

In case Zach Galifianakis didn't answer all your questions...

Obamacare seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This FREE guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.

Sheryll Poe has no position in any stocks mentioned. The Motley Fool recommends Facebook, Starbucks, Twitter, Under Armour, and Walt Disney. The Motley Fool owns shares of Facebook, Starbucks, Under Armour, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers