Reddit has been quietly reshaping how it sells ads, ditching programmatic internet pipes to build a more direct way of selling inventory on its site, and the change is already starting to have an impact on the company's bottom line. On Thursday, Reddit announced it topped $100 million in ad revenue in the second quarter, which ended in June.
Reddit discussed the ad revenue milestone while revealing its plans to raise up to $700 million from investors at a valuation of more than $10 billion. The emphasis on its advertising revenue was noteworthy because it comes on the heels of an update to Reddit’s ad platform in April, which tweaked how digital advertisers buy inventory on the site.
In the second quarter, Reddit stopped accepting programmatic ads, which is inventory sold through third-party ad exchanges like PubMatic and Xandr. Reddit instead changed all advertising to a direct-sold model, running through its internal team, representing a significant shift in strategy. Reddit is taking the “walled garden” approach akin to Facebook and other platforms that restrict the number of outside parties that can target users on their services.
“On April 30, Reddit removed the last remaining programmatic ads on our platform, and moving forward, all ads on Reddit will be native ads sold through our direct Sales channels or on our Ads Platform,” the company said in a statement to Ad Age.