Reddit ramps up plans for performance dollars — but is it enough to entice advertisers?

According to the platform, Contextual Keyword Targeting gives advertisers “the option to select specific keywords to associate with their brand, or even align keywords with their creative ad copy for added relevance.”

Additionally, Product Ads, like the name suggests, will feature product information such as descriptions and pricing in local currencies as well as a call-to-action button. Reddit said the ad format enables advertisers to “quickly and easily build ads directly from their existing catalogs with no need for additional creative resources.”

The intent of these products is clear even if Reddit hasn’t openly said it. (When Digiday reached out to Reddit, they pointed to the official announcement.) However, the response from advertisers to them isn’t as clear-cut. Digiday spoke to nine of them. Most of them (seven) are at the very least intrigued by the new ad formats, while some are less convinced. 

A lot of the positivity around these updates stem from the fact that ad targeting — which, for Reddit, is something that has paled in comparison to Facebook and Google — is showing signs of improvement. In fact, Lanie Shalek, director of growth marketing at Jobi Capital, said she believes these new formats could potentially address the platform’s limitations and make Reddit a more attractive platform for performance advertising.

“If implemented effectively, these new ad solutions could enhance Reddit’s value proposition for performance advertisers, offering more targeting options and potentially improving ROI,” she said.

However, Alex Hamilton, head of innovation at Dentsu Creative, noted that one challenge Reddit faces in competing for performance dollars is brand perception of what the platform was versus what it is now.

“The business has a job to do in educating brands and agencies about how the platform operates and why spend should be diverted to these new ad solutions,” he said.

And he’s right. 

Only six months ago, Digiday reported that while Reddit had made strides to curry favor with advertisers, there was still work to be done to turn that sentiment into ad dollars. This is simply because Reddit still has an education piece to fit in the puzzle, namely about what Reddit can provide for advertisers (and brands) that other platforms can’t, and if it can provide a competitive ROI. 

“Reddit is still relatively unknown to some as a social media platform, meaning many don’t understand its potential pull,” noted Karim Salama, founder of web and digital marketing agency e-innovate. 

Salama also pointed out that while about 20% of his clients are currently on Reddit and excited to try out the ad formats, there are reservations among the remaining 80% as to whether these ad formats would entice them to give the platform a try.

“Businesses tend to lean towards more established social media platforms like Facebook and Instagram when it comes to experimenting with their advertising strategies as these platforms offer broad demographic coverage and are perceived as safer bets,” he added. 

Similarly, Brian Chevalier-Jordan, CMO at National Business Capital, agreed that while these two new formats might bring marginal improvements to advertising on Reddit, he doubts they will ever challenge Google, Facebook or TikTok.

“These formats in and of themselves do not make Reddit a serious contender [for performance dollars], since they require additional targeting capabilities to avoid angering or alienating the audience you are seeking,” he said.

But while Reddit is often praised and admired for its highly engaged and dedicated user base, another challenge will be ensuring these new ad formats are seamlessly integrated into the user experience, given that there is a very clear anti-advertising sentiment on the platform. 

“From a Redditor perspective (I’m a frequent user), the experience on the platform has always felt user first and using it as a shopping platform doesn’t feel naturally intuitive,” said Hamilton. “That said, I see appetite from brands to test these new solutions as Reddit is an intriguing platform for many.”

However, the launch of these new ad products has been somewhat overshadowed by Reddit’s recent blackout, which saw some marketers switch off their Reddit advertising for the time being. One could argue that while the protest has been a bit of a disturbance, it’s demonstrated just how loyal, passionate and dedicated Redditors are to their platform in their bid to get their voices heard, as they want it to be run in the best possible way. 

All in all, it looks like these ad formats are certainly a step in the right direction as Reddit strengthens its ads platform, and in particular its social commerce business. But while they might be new for Reddit, the platform is still ultimately playing catch-up, given that similar formats have already been readily available for quite some time on Reddit’s platform peers.

“These developments are driving them [Reddit] closer to having more of an identity in the social space, convincing clients to move towards an always-on investment strategy across highly engaged communities,” said Paul Kasamias, chief performance officer at Starcom. “However there is still a growth trajectory ahead to truly compete in this [performance] space.”