Inside Reddit’s strategy to recruit advertisers following its IPO

Reddit, the social platform with tens of thousands of niche communities, went public today, and its next quest is a search for more advertisers to join the service and a push into commerce, according to Jen Wong, Reddit’s chief operating officer, who spoke with Ad Age. The launch as a public company meant that advertisers and investors got to see new details about the shape of Reddit’s business, a company that has been in the internet trenches since 2005. Reddit is certainly a unique corner of the web, but it still has to attract a wider base of advertisers to boost revenue. Reddit revealed that its top 10 advertisers accounted for 26% of ad revenue last year when it generated $804 million, up 21% from 2022. Reddit laid out its strategy in detail before its debut on the New York Stock Exchange today, when its Snoo mascot rang the bell to open trading. In the past few weeks, Reddit launched what’s called Reddit Pro, a new way for brands to run accounts on the site and talk with the 73.1 million daily active users. Last week, Reddit also launched a new ad format called “free-form ads,” which Redditors would understand as “megaposts,” in-depth, effort-filled scrolls of information. Read more about Reddit’s new ad format “We have a long-term roadmap, nothing changes obviously,” Wong said. “We’ve been diversifying our verticals [of advertisers], investing in building out retail and CPG and auto and financial services. Our first endemic verticals were like tech and media and, entertainment, so really widen in terms of bringing more advertisers onto the platform.” The company was valued at $6.4 billion for its public stock float, with the share price opening at $34. The value of shares initially increased by almost 60% before settling at about $46 by mid-afternoon, up more than 35%. Check out the latest Ad Age events and award programs Reddit’s newly public face means extra attention for the company as it competes in social media against Meta, TikTok and X (formerly Twitter). Reddit confronts the same challenges as those companies, such as the anti-tracking measures on Apple iPhones, where apps operate. Apple’s data restrictions meant advertising-dependent apps had to revamp their ad technology to measure ad campaigns for brands without relying on signals from Apple. Meanwhile, Google plans to deprecate cookies and deploy similar tracking changes to Apple across its ecosystem. Reddit has some unique challenges here too, because its user base, while highly engaged, also appears harder to identify. About half of Reddit’s daily users aren’t logged into the site, according to the public filings, so they don’t give Reddit an easy way to find them for ads. Still, Reddit relies on context and the wide variety of interests it gleans from where visitors spend their time, searches, communities and conversations. Wong spoke with Ad Age following a day with Snoo at the stock exchange, giving her thoughts on the future of advertising on Reddit. This conversation has been lightly edited for clarity. What’s the strategy this year in advertising? We’ve been doing a lot of great work in delivering performance particularly, we start at the mid-end of the funnel, improving click volume and click returns and [cost per click] and really driving efficiency for advertisers, so that’s been really strong. That unlocks mid-market advertisers that can be on our platform. It’s also great even for the top 300 advertisers, they can work with us at the top of the funnel, where we have incredible unduplicated reach then also at the mid-funnel. Then we’ve been investing in building out the capability at the bottom of the funnel, so taking that post-click action into app-install and add-to-cart and soon shopping. How are you improving advertisers’ ability to use Reddit for shopping campaigns? There are multiple components to shopping. We launched catalog and product carousels in terms of the ad formats. Then you do a lot of machine learning work, a lot of ML work, on the prediction models. You do a lot of signal collection work. We launched conversion API [application programming interface to track ad performance] last year. We want to lay down more signals collection that really helps with driving performance. [Also read: How Reddit can help predict future consumer trends] This month, you launched Reddit Pro, so businesses can create accounts. Why was that important to attracting advertisers? I’ve been wanting to do this for a long time because I’ve long believed that brands and companies can have a home on Reddit organically, ahead of being an advertiser. But we haven’t had a profile that makes sense for businesses, where they can be official, where they can get a set of insights about where their customer might be, what communities are talking about their products or their brand, and a way to organically engage with communities and get to know Reddit ahead of becoming a paid advertising customer. You have been testing new ad units, such as promoted posts and free-form ads. What do those entail? Promoted community posts go along with Reddit Pro. When those companies and businesses come on to Reddit and they engage organically with the community what they can do is they can actually boost that also on a paid basis. So, take an organic post and make it into an ad to increase their reach. Free-form is basically the advertising form of the megapost, or the megathread, because Redditors, they read so deeply and they’re so engaged, and we’re one of the few platforms where you could have this free-form ad that goes in-depth with text and information, which basically gives extra detail and research to somebody who’s learning about brands or a product or service.

Inside Reddit’s strategy to recruit advertisers following its IPO

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