Aug 08, 2024 11:02:00

Reddit is considering introducing search ads and paid content in the future

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Reddit, an online bulletin board site, released its financial report for the second quarter of 2024 (April to June) on August 6, 2024. In this financial report, Jen Wong, Reddit's Chief Operating Officer (COO), suggested the possibility of introducing search advertising and paid content to Reddit.

Reddit considers search ads, paywalled content for the future | Ars Technica
https://arstechnica.com/gadgets/2024/08/reddit-mulls-showing-ads-in-more-places-paywalled-subreddits/

Reddit CEO Suggests Some Subreddits Could Be Paywalled - MacRumors
https://www.macrumors.com/2024/08/07/reddit-paywalled-subreddits/

Reddit's total revenue in the second quarter of 2024 was $281.2 million, up 54% from the same period last year. Net income was a loss of $10.1 million, but the size of the loss was smaller than the loss of $41.1 million in the same period last year.

One of the reasons for Reddit's improved revenue is advertising revenue. In June 2023, Reddit made its API a paid service, forcing most third-party apps to stop offering it.

Fearing that third-party apps will disappear as Reddit's API becomes paid, some communities plan to make their apps private in protest - GIGAZINE

Although the measure received strong backlash from users, Reddit appears to have aimed to increase advertising revenue by increasing access to its official app and website. In fact, advertising revenue in the second quarter of 2024 increased 41% year-on-year to $253.1 million (approximately 37 billion yen), accounting for approximately 90% of total revenue.

Wong said that in order to increase advertising revenue, 'it is important for advertisers to be able to find the results they want, in the quantity and at the price they want,' and that the value per ad, that is, the amount that advertisers pay per 1,000 average impressions, should be raised. To that end, Wong argued that ads should be placed in places where there are no ads at the time of writing.

One of the places where there are no ads at the time of writing, and where users are particularly likely to see them, is 'Reddit comments.' COO Wong emphasized that they are already testing placing ad space in comments.

Reddit introduces 'free-form ads' that look like posts from regular users - GIGAZINE

Reddit CEO Steve Huffman also said he is considering selling advertising space within Reddit search results. However, he believes that before that, Reddit's search function itself needs to be improved. 'We will test a new search results page powered by AI to summarize and recommend content, allowing users to dig deeper into information on Reddit and discover new communities,' Huffman said.

Huffman also proposed 'offering paid content,' but did not reveal what that would entail. Huffman said, 'This is an extension of the Reddit platform, not a predator of existing Reddits,' emphasizing that the plan is not to put a paywall on content that was previously available for free.

Tim Rathschmidt, a spokesman for Reddit, told IT news site Ars Technica, 'In the past, we offered a subreddit called r/goldlounge that was only available to premium plan users, and it was well received by users. Now, we're going to create new types of subreddits that can have exclusive content, private areas, and more.' In other words, it seems that they are considering ideas such as creating subreddits that can only be viewed by paid plan users, or creating areas within subreddits that can only be accessed by paid plan users.

Although many users and subreddits launched large-scale protests against Reddit over the aforementioned fee-for-use API, Reddit reported that its daily active unique users in the second quarter of 2024 were 91.2 million, a 51% increase over the same period last year.