How Reddit Challenges Google and Meta with Ads Based on Topics - Not User Data

Six months after going public, Reddit 'is winning over advertisers,' reports Bloomberg, 'by showing that it's different than other internet platforms, which often rely on users' identities and personal information to target ads.'

Instead, Reddit is targeting people based on their interests, relying on the site's [100,000+] deeply detailed communities — called subreddits — to match advertisers with potential customers... Early returns on that strategy have been promising. The text-based site easily surpassed expectations in its first two earnings reports this year, disclosing strong sales and better-than-expected projected growth. The stock is up 66% from its $34 initial public offering price in March.

Beyond targeting subreddits, the company also can use specific keywords to sell what it calls conversation ads. If a Redditor in r/HydroHomies — a community about the benefits of drinking water that has more than 1.2 million users — asks for advice about a specific brand of water bottle, an ad for that exact product could appear next to that user's post. These conversation ads are the fastest-growing ad format on the platform, the company said. They also give marketers a chance to appear in subreddits where customers are already talking about them...

Despite being around for close to 20 years, Reddit only started investing heavily in its advertising business in 2018, and is now hoping that marketers and investors are ready to acknowledge the site has grown up. Executives often point to its unique form of content moderation as proof that it's a safer place for brands than other sites. Reddit largely relies on a group of more than 60,000 human moderators — users who volunteer to serve as a sort of content police — to flag or take down unsavory content. On top of that, the site has a voting system so users can rate the quality of content. 'From everything we're seeing, they have a level of brand safety and content safety for advertisers that is very comparable to most other social platforms,' said Jack Johnston, senior social innovation director at performance marketing agency Tinuiti, which buys ads on Meta, Pinterest, X and Reddit. 'That wasn't necessarily the case a couple years ago.'

Those improvements have paid dividends. Reddit recently signed new content partnerships with major sports leagues, including the NFL, NBA and MLB, and the majority of Reddit's advertising revenue comes from Fortune 500 companies. Last year, the site made close to $800 million in ad sales, and counts marquee brands like Toyota, Disney, Samsung and Ulta Beauty among its advertisers. This year, analysts expect Reddit's overall advertising business to eclipse $1.1 billion in revenue and see the company reaching $2 billion in sales as soon as 2027, according to data compiled by Bloomberg. To get there, Reddit will need to court smaller marketers, too. The company makes more than 25% of its revenue from just 10 advertisers, meaning any unexpected pullback from a key partner could have a significant impact on the company's business, said Dan Salmon, lead analyst at New Street Research. 'This army of small businesses — that's the most important thing for all of those platforms, for Reddit, for Pinterest, for X,' he said...

Advertisers large and small say they're already planning to spend more on Reddit in the coming quarters.
The article points out that more than 90 million people visit Reddit each day.

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