Reddit US ad revenues could top $100M this year amid added focus on ad products
Are the platform's investments in user experience and ad products calming advertisers' skittishness? eMarketer predicts Reddit will more than double U.S. ad revenues in the next two years.
Over the past year, social community site Reddit has aggressively rolled out improvements to its ad offerings — introducing native promoted posts in its mobile apps, native autoplay video ads, calls to action in ads, performance-based ad units and app install ads. Now, new figures from eMarketer indicate the efforts are paying off, with the site expected to bring in $119 million in ad revenues in 2019, up from $77 million in 2018. That number is expected to double by 2021, when the research firm predicts Reddit will take in $262 million in ad revenue.
“Reddit’s users are tech-savvy and highly engaged, making them attractive to advertisers,” said eMarketer forecasting director Monica Peart. “A large portion are unique users, meaning they don’t use other social platforms. That means advertisers have the potential to reach new audiences in a highly targeted way.”
User numbers rising steadily. In addition to benefiting from the retooling of its ad ecosystem, Reddit is gaining from its major redesign roll-out last year. It has boosted views by building capabilities to host images and videos on the site itself — previously, users had to link out to include media in their posts.
Reddit may also be winning users due to increasing disaffection with Facebook and the privacy implications of its ad system. By contrast, Reddit’s users are anonymous, with accounts linked to usernames instead of real names, and the platform allows viewing by non-logged in users.
While eMarketer expects the number of U.S. logged-in user growth to slow after this year, the overall U.S. audience is expected to continue growing. By 2023 Reddit’s logged-in audience is expected to account for nearly 12 percent of all U.S. internet users.
Though Reddit ads are targeted by locations, interests, communities, devices and time of day, rather than by the more granular categories offered by Facebook, some advertisers are achieving results significant enough to bring them back.
Still, Reddit isn’t about to become one of the major internet ad players. eMarketers’s estimates give it just a 0.1 percent share of the U.S. digital ad market, and that dramatic doubling in revenues by 2021 still brings it only to 0.2 percent of the total.
eMarketer cites the site’s slow development of mobile apps — it only launched official iOS and Android apps in 2016 — as one reason it lags most other sites in mobile ad revenue. This year, mobile will account for 57.0 percent of Reddit’s ad revenues ($67.8 million), the research firm said.
Reddit’s other challenge is its free-for-all, often NSFW content, which some advertisers shy from.
“As a mix of forum and trending news site with a bit of social network, Reddit has operated on an ‘open internet’ ethos,” Peart said. “While that has yielded organic growth among a hard-to-reach audience, it has also meant a reality where controversial content is the norm. And in a news climate where missteps can tarnish results, that makes some digital advertisers nervous.”
Why you should care. Reddit may offer you the opportunity to reach a unique and hard-to-reach audience in an environment with less competition than other platforms. One other development to note is that Reddit in January brought aboard a new VP of ad products and engineering, Shariq Rizvi, and, the company’s blog in late January stated its 2019 plans as including, “broadening our advertising tools and building even more comprehensive marketplace capabilities with performance advertising….” Worth keeping an eye on, for sure.