Reddit spent more than a decade as the internet’s edgy bulletin board, a site where mostly anonymous users could post memes and share wild opinions on topics ranging from investing advice to Taylor Swift’s love life. It was also a service advertisers avoided.
Now, six months into life as a publicly traded company, Reddit is winning over advertisers for precisely the same reason: While other platforms rely on users’ personal information to show them ads, Reddit targets anonymous users based on their interests before matching advertisers with potential customers.
Users who don’t identify themselves tend to be more open and honest, said Jen Wong, Reddit’s chief operating officer. “People on Reddit reveal things about themselves that they would not on other platforms,” said Wong.
The site’s discussion forums — called subreddits — give advertisers a chance to reach out to users with specific tastes. For instance, adding a financial services ad in a group about investing, or a car ad in a forum about camping.
Such contextual or interest-based advertising, as the approach is called, may set the site apart in a crowded industry dominated by Meta and Google.
The challenges
However, the platform’s colourful history can complicate its pitch. Redditors are known for being rowdy, free-spirited and unafraid to speak their minds. Users have, in the past, revolted against executives, taken subreddits offline over policy changes and even threatened to bet against Reddit’s own IPO. Reddit’s forums were also known for hosting a maelstrom of unsavoury content, which kept advertisers and investors at bay.
Marketers are often hesitant to buy ads if those messages could end up next to something distasteful. X, for example, saw advertising revenue decline close to 50 per cent after Elon Musk purchased the site and cut back on content moderation.
The opportunities
But those passionate users can also bring a benefit. “You can actually reach people that no other channel can reach,” said Jack Johnston, senior social innovation director at performance marketing agency Tinuiti, which buys ads on Meta, Pinterest, X and Reddit.
This year, analysts expect Reddit’s overall advertising business to eclipse USD 1.1 billion in revenue. To get there, Reddit will need to court smaller marketers, too.
Currently, it makes more than 25 per cent of its revenue from just 10 advertisers, meaning any unexpected pullback from a key partner could have a significant impact on the company’s business, said Dan Salmon, lead analyst at New Street Research.
link