Reddit's difficult ad plan

Ahead of a reported IPO this year, one of the original social media sites, Reddit, is attempting to build its advertising business around its highly engaged – though often ad-sceptical – community, as it faces unfavourable comparisons to other major social media companies.

Why it matters

The front page of the internet, as Reddit is also known, is an essential part of the web experience for users in the know. While they are growing, they remain a small part of the web. But if engagement from a passionate community is what your campaign needs, it’s well worth a look.

Background

In December, Reddit made a confidential filing with the Securities and Exchange Commission that revealed no concrete details about its plans apart from the fact there is one. Now, as the company starts to make overtures with major advertising holding groups, some of the details are coming into view.

Last year, the company really began telling the advertising world about itself, noting the site’s importance in the purchase journey. A handful of barriers remain:

• Its ad tools are limited in their targeting capability.
• There is a lack of effectiveness evidence.

Still, according to comments made by WPP boss Mark Read to the FT, the amount of investment from the holding group’s clients via its agencies has grown to “double-digit millions of dollars”.

Influence

The memestock saga was a critical moment for Reddit, which for all that it broadcast its rogue nature, it also made brands and the wider public aware of the influence its user base has over such supposedly powerful areas of modern life as the financial markets.

This is despite having a pretty tiny user base by the continental standards of Meta, with at least 430m monthly users and 52m daily active users. Its main presence is in the US but is growing fast around the world.

The difference

Unlike most other social networks, Reddit is not controlled by an algorithm. Rather, users join communities and then ‘upvote’ content if they like it, and ‘downvote’ content if they don’t. Its simplicity is part of its charm. Users go there because they want to, because they trust the community they are part of, and as a result spend an average of 34 minutes per day on the site.

However, that simplicity is a significant stumbling block to building an ad business when Reddit has avoided getting up in people’s experiences this long. Many ad professionals doubt that it can pull off this switch and create an attractive investment opportunity. 

Sourced from Reddit, WARC, Fool, FT