How Reddit Infighting May Affect Its Ad Business



Reddit, the online link-sharing community that has been described as the “front page of the Internet,” is the buzzy place for companies to advertise on. As users revolt over changes that may restrict what they post, a light has been cast on the volatile nature of its community that could be great or terrible for Reddit advertisers.

“What makes Reddit really interesting is the audience is very savvy,” said Bert Choi, media supervisor at advertising agency RPA. “They know that they’re being advertised to, and they’re also very culturally aware and opinionated. You have to speak to the audience different than any other site.”

The privately owned platform has been making headlines, since its users and former employees have expressed their discontent with the direction the company is taking.

The events kicked off when the company unexpectedly fired talent director Victoria Taylor. Ellen Pao resigned as CEO. She was replaced by co-founder Steve Huffman.

Recently, Huffman announced on Reddit that it would be adopting new rules to temper inappropriate speech on its site, including banning spam, copyrighted materials, unauthorized private information, violent threats, harassment, and sexual content involving minors.

“No company is perfect at addressing these hard issues,” he wrote. “We’ve spent the last few days here discussing and agree that an approach like this allows us as a company to repudiate content we don’t want to associate with the business, but gives individuals freedom to consume it if they choose. This is what we will try, and if the hateful users continue to spill out into mainstream Reddit, we will try more approaches that are aggressive. Freedom of expression is important to us, but it’s more important to us that we at Reddit be true to our mission.”

In Pao’s recent high-profile lawsuit against her previous employer Kleiner Perkins Caufield & Byers, Reddit was valued $250 million to $500 million.

A source close to the Reddit situation told CNBC that Taylor’s disagreements with co-founder Alexis Ohanian led to her ouster. Taylor wanted to keep Reddit threads like the “Ask Me Anything” question-and-answer feature free from outside moderation. Ohanian, however, wanted to add other topics and more control to make brands feel safer running their ads on the platform and investors feel more secure about Reddit.

Former CEO Yishan Wong commented on Reddit that Ohanian was behind the firing because “he had different ideas for AMAs, he didn’t like Victoria’s role.” He added that Pao, who resigned after being the target of much of the user backlash, had little say in the matter.

“I actually asked that he be on the board when I joined; I used to respect Alexis Ohanian,” he wrote. “After this, not quite so much.”

Reddit did not respond to requests for comment.

The move to add more regulation to the largely independent community relies heavily on volunteers to moderate its “subreddits” or topics. It could be heavily tied to Reddit’s push to get advertisers on its site over the last year.

While Reddit is not as popular as social networks like Facebook and Twitter, advertising experts say it has been selling itself on its dedicated audience. In June, it had a little fewer than 164 million unique visitors, including 3.7 million who had registered. Choi said marketers willing to experiment with creating and sharing their own content online can find a home here. The costs for advertising on it tend to be low compared with the rest of social media, given the audience.

“There’s a handful of little cultural hits everyday distributed on the Internet,” said Greg March, CEO of creative media agency IKON3. “Most of us catch them from friends on Facebook or Twitter. However, many people go to places like Reddit because they value finding out about these things first and being the ones to share it first. They take pride in that. These are extremely attractive people to brands looking to sell by creating engaging content they hope will be shared across the Internet.”

Reddit’s ad options include promoted posts, which are brand-sponsored ideas, media or links that sit on the top of a page in their own designated box. Companies can choose which subreddit to use based on what aligns with their goals. March said companies that are focused on cultural impact as a way to tell their story fit well on the platform. Those looking to drive direct sales may need to look elsewhere.

There is also limited control over how the campaign can be received. For example, numerous agencies have pointed out that promoted posts have been taken over by naysayers who post anti-brand messages. Sometimes, the comments are from Reddit users; other times, they suspect it could be from members of competitive brands trying to derail the campaign.

“It’s one of those things that if you do any content or inbound marketing, it’s on the radar, but it’s not as popular or pushed,” said Jared Del Prete, director of digital strategy and search at advertising agency EGC Group. “Advertisers aren’t as comfortable with it as Facebook. We just look at this ad platform as still relatively new. There’s still a lot of kinks.”

However, RPA supervisor of digital content strategy Mike Dossett notes that brands are aware of the risks. They are also aware of the potential viral success of sharing their campaigns. While this recent kerfuffle only highlighted what can happen if the Reddit community mobilizes against you, it is not something that companies did not take into account before.

“This is the way it’s always been,” Dossett said. “For brands that see this and are spooked off—and I’m sure many will be—it might not have been right for them.”

Reprinted by permission

Image credit: CC by Eva Blue

About the author: Michelle Castillo

Michelle Castillo is a staff writer for CNBC Digital, covering advertising and digital media. She lives in New York.

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