Everything is an advertising business, even Reddit. According to the company’s S-1, 98% of its revenue comes from advertisements, and while the company was founded in 2005, it wasn’t until 2018 that it says it “meaningfully” invested in its ads business.
It was around that time that Jen Wong joined the company as chief operating officer, overseeing Reddit’s business strategy, including its ads business.
Marketing Brew sat down with Wong to talk about her vision for advertising on Reddit, as well as the platform’s new shoppable ad inventory.
This interview has been lightly edited and condensed for clarity.
In 2018, shortly after you were hired, you told Digiday that ads would be a big business for Reddit. How has your strategy evolved since then?
We have always been a community platform. Six years ago, the word “community” was not quite the buzzword it is today. It took some time to establish what community is, even though we’ve been doing it for 19 years...Social [media] is transacted based on demographic profiles. And we’re not that. It took a while for us to establish [that] our proposition is about being the best in context and interests.
Advertisers love communities and audiences, but they also love performance.
We’ve always believed that Reddit can deliver performance, since the very beginning, since we started, that it could be a full-funnel solution. The reason why is because we have all the raw materials for it.
At the top of the funnel, we have unduplicated reach; it’s been very consistent—people who are on our platform that aren’t anywhere else—and then the targeting parameters, because what people reveal is totally different on Reddit. You’re going to find customers you can’t find in other places because they’re revealing interest in things that you never just post on Instagram, for example.
The bottom-of-the-funnel performance we’ve always believed in because we can see the content where people are spending [their] time. Twenty percent of new posts are specific to products and product inquiries…They are commercial in nature. They’re talking about a product or a service, like, “Hey, what’s this vacuum,” or “What car should I buy?” And they’re personalized recommendations.
We always saw that. We knew that people were shopping…Now we’re getting to the point in our ad platform where I think we’ve done a very good job at the top of the funnel, done a very good job in the middle of the funnel…and now you see us launch shopping, and focusing on the bottom of the funnel.
Some media buyers have told us that Reddit is a nice-to-have and not a need-to-have. What are your goals for the ads business?
Well, we are going to be a need-to-have, and I would argue we are a need-to-have because we already have users and people and customers that you can’t find anywhere else. Our goal is, obviously, to be a must-buy for thousands of advertisers…We cover every topic on the planet. There’s no reason why you can’t be an advertiser on Reddit.
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Ten advertisers make up a quarter of the platform’s revenue, according to your S-1 filing. Is that a problem?
No. I think we’d like to continue to diversify. We’d like to have 10x–20x times the number of advertisers that we do today, but that’s not unusual.
When you start at the top of the funnel, you start with large, global advertisers. It’s not unusual for that to happen.Then, what happens is, you diversify over time. We started with our obvious endemics, like tech, media, entertainment. But if you look at our book over the last year, we’ve dramatically diversified—pharmaceuticals, auto, retail CPG—those areas have grown significantly, those are our growth drivers now. I’m pretty confident we’ll diversify.
You recently rolled out shoppable, catalog-like inventory. What does it look like?
It’s product-level creative…and the creative is getting you down to very specific products. If you go into a conversation today about “What is the best vacuum?” you are going to see conversations about specific models and brands. People are already at the level of considering specific models and products…It just makes logical sense.
Let’s take KitchenAid stand mixers, and the conversation is, KitchenAid is amazing. But then another comment is, “I hate KitchenAid.” How will an advertiser know whether it wants to be there?
Today, they can target based on the keyword. We will develop more sophisticated sentiment analysis where people can make that decision. But yes, most pages have multiple products that people are talking about. That’s sort of the point. And that’s fine. That’s an opportunity for the advertiser to say, look, there are people here who are interested in my mixer, and I can present it to them.
Recently, 404 Media published a story about a company selling tools that use AI to manipulate Reddit posts, plugging products, and effectively astroturfing the platform. Are you concerned about AI content littering the internet and Reddit?
People have been trying to do that for a long time. It’s not like we haven’t been fighting spam for a long time. I think we do a pretty good job at it. We have our own systems that are actually quite good at it, but every single Reddit user is a moderator. You have to fool every single person, you have to fool thousands of people, to upvote and say [something] is good. Redditors are smart. Especially if you’re in the context of a community that actually has knowledge about something, if it’s not good, it’s not going to survive a vote…Built into the platform is a natural, pretty strong inoculation to spam or synthetic content or abuses. It’s not perfect, but it gets better over time. I think we have some of the best mechanisms for it.