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With these ideas, Reddit is finally trying to make money
Reddit is one of the largest platforms in the world. Even so, the company has relatively little revenue and is extremely difficult with monetization. The passionate community only accepts advertising in small steps. So Reddit is now planning a whole new strategy and wants to convert every shop link on the platform into an affiliate link. We show how this works and see what other levers Reddit wants to use to finally make money.
Reddit has long been struggling to find the right monetization strategy. Despite more than 234 million active users who say they spend an average of 13 minutes per session and, according to the analysis tool Similar Web, over a billion visits a month, there was no real marketing for a long time. Many advertisers saw parts of the content as an unsuitable advertising environment, after all there was always controversy about nude pictures stolen by celebrities and posted on Reddit ("The Fappening") or misogynistic topics ("Gamergate"). On the other hand, the Reddit community is very critical when it comes to suitable advertising formats or advertising at all.
How can you please the community?
There are now native advertising formats on the platform that look like posts from the community. The company is based on the example of Facebook. Reddit was able to win US companies such as Vice, Newsweek and the cable broadcaster A&E as customers. Platform employees help advertisers find the right type of communication for the community. Zubair Jandali developed this plan as Vice President of Sales at Reddit. He previously worked at Google as an advertising manager. He should provide more money in the cash register, after all, Reddit belongs to the Condé-Nast publishing house and has to be in the black at some point.
Even so, sales in 2016 are only expected to rise to $ 20 million. Previously, the company had hoped for $ 35 million, according to The Information. That's very little for a site with a $ 500 million valuation and over 100 employees - the company also lives on a $ 50 million investment from two years ago to which Jared Leto and Snoop Dogg, among others, contributed a few dollars to have. For comparison: Facebook states that the company generated average revenue per user of just over $ 3.30 in the first quarter of 2016. In the US, this is over $ 12. Reddit makes sales of just over eight cents per user - when annual sales of $ 20 million are reached.
Examples of native ads on Reddit
The prerequisites for advertising on the platform are actually not that bad. Recently, Reddit co-founder Steve Huffman caused a stir in an interview with The Next Web with his statements about targeting in the community: “Our targeting will be different from Facebook because we know all of your interests. And not just what you're ready to share on Facebook, but your darkest secrets. We know everything. ”The Reddit community immediately debated whether Huffman was really serious or just joking. However, Reddit recently confirmed that advertisers will soon be offered targeting by keyword and interest.
Novel affiliate strategy
Affiliate links are the latest in a series of efforts the company is taking to turn the tide. It should start on June 6, 2016. In a Reddit post, the development team announced that shop links posted on the platform will be automatically provided with affiliate codes for some of the users. If users click on these links, Reddit receives a commission from the online shops for subsequent sales. The feature is to be extended to the entire platform at a later date. Then every shop link posted on Reddit to a total of 1,500 online retailers is supplemented with an affiliate code using Viglink technology. In the USA, Viglink works with publishers such as Cnet or Reuters and retailers such as Ebay, Amazon, Foot Locker, Booking.com and Nike. The Viglink Convert tool is integrated into the source code of the page and automatically provides all posted links to partner shops with the corresponding affiliate codes.
Of course, this announcement also sparked controversial discussions in the community. At the beginning of 2015, the URL shortener Bitly had to fight a lot of criticism because it had also started Viglink to add an affiliate code to every shortened URL of Bitly users without a premium account. Anyone who clicks on such a link automatically catches the cookie of the respective advertising network on the target page - many Reddit users encounter this practice by Viglink. Because the functionality on the platform is the same as with Bitly. So Reddit rowed back a little, posted the opt-out option from the entire Viglink universe and described how users can bypass the affiliate function once by right-clicking and copying the link.
My own photo service and the break with Imgur
Even before the affiliate function was tested, it became known that Reddit was planning its own photo service to post pictures on the platform. Before that, Imgur was the tool of choice for the community and grew with Reddit. The users can already use the new function in the first communities such as Art, Aww, Food and Funny. It is now possible to upload and publish the images directly in his post. Before, Reddit users had to take the detour via Imgur, upload the picture there and post the link on the platform. Reddit should hope for more page views from the new feature, which previously wandered to Imgur, and more control over the content that users upload.
In order to bring even more traffic to its own site, the platform also recently introduced an embed function. It's an open secret that viral sites like Buzzfeed, Upworthy, and heftig.co are stealing content from Reddit. Now the site hopes that these publishers will incorporate the original Reddit posts more often, as happens with Twitter, Facebook or Youtube content. In addition to traffic, this could also bring new marketing opportunities. Twitter, for example, offers the option of placing advertising in embedded timelines; something similar would also be possible in embedded Reddit content.
Finally a mobile strategy
Ad in the Reddit app
For a long time, Reddit had ignored Mobile. Since even the desktop site, which is loved by the community, looks like it was in 1995, this should not come as a surprise. A responsive site has only recently been available, and many users had to make do with third-party apps such as Narwhal, BaconReader or Antenna. That changed at least in the US in April 2016. The official Reddit app jumped to first place there in the App Store. In the meantime, it has reached 334th place, but is stable in 2nd place in the “News” category. The development in Google's Play Store is similar. With the app, Reddit can access completely new ad formats for the platform. Among the recommended subreddits are app install ads from large partners such as Amazon or the German game developer Wooga.
Of course, there was also a lot of criticism from the users about the new app. However, partly controlled by the previously active providers of client apps such as Alien Blue. For a long time, they benefited from the platform's weakness in mobile, collected millions of users and were able to display their own advertising. Now their business model is in jeopardy and shortly after the official app was released, Apple banned the most popular third-party apps for pornographic content. These are now available again and Reddit denies being responsible for the deletion, but the image of the app is tarnished among users. One of the largest platforms in the world probably never really comes to rest.
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