Reddit has made it clear that it’s an ad-first business. Today, it expanded on that practice with a new ad format that looks to sell things to Reddit users. Simultaneously, Reddit has marketers who are interested in pushing products to users through seemingly legitimate accounts.
In a blog post today, Reddit announced that its Dynamic Product Ads are entering public beta globally. The ad format uses “shopping signals,” aka discussions with people looking to try a product or brand, machine learning, and advertiser product catalogs in order to post relevant ads. Reddit shared an image in the blog post that shows ads, including with products and pricing, that seem to relate to a posted question. User responses to the Reddit post appear under the ad.
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A somewhat blurry depiction of the new type of ads Reddit is testing.
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A (still blurry) example of a more targeted approach to Reddit’s new ad format.
Reddit’s Dynamic Product Ads can automatically show users ads “based on the products they’ve previously engaged with on the advertiser’s site” and/or “based on what people engage with on Reddit or advertiser sites,” per the blog.
Reddit is an ad business
Reddit’s blog didn’t imply that Dynamic Product Ads means users would see more ads than they do currently. However, today’s blog highlighted the newly public company’s focus on ad sales.
“With Dynamic Product Ads, brands can tap into the rich, high-intent product conversations that people come to Reddit for,” Reddit EVP of Business Marketing and Growth Jim Squires said in a statement.
The blog also noted that “Reddit’s communities are naturally commercial,” adding:
Reddit is where people come to make shopping decisions, and we’re focused on bringing brands into these interactions in a way that adds value for people and drives growth for businesses.
The stance has been increasingly clear over the past year, as Reddit became rather vocal about the fact that it’s never been profitable. In June, the company started charging for API access, resulting in numerous valued third-party Reddit apps closing and messy user protests that left a bad taste in countless long-time users’ and moderators’ mouths. While Reddit initially announced the change as a way to prevent large language models from using its data for free training, it was also seen as a way to drive users to Reddit’s website and mobile app, where it can serve users ads.
Per Reddit’s February SEC filing (PDF), ads made up 98 percent of Reddit’s revenues in 2023 and 2022. That filing included a note from CEO Steve Huffman, saying: “Advertising is our first business” and that Reddit’s ad business is “still in the early phases of growing.”
In September, the company started preventing users from opting out of personalized ads. In June, Reddit introduced a new tool to advertisers that uses natural language processing to look through Reddit user comments for keywords that signal potential interest for a brand.
Reddit’s blog post today hinted at some future evolutions focused on showing Reddit users ads, including “tools and features such as new shopping ads formats like collection ads that enhance the shopper experience while driving performance” and “merchant platform integrations that welcome smaller merchants.”