Why Reddit’s recent blackout could be a real problem for advertisers

reddit revenue

Numerous communities on Reddit have gone dark, essentially taking themselves offline, in protest of how the platform is being run, including plans to charge for access to its data. For the marketers that rely on those communities (or subreddits) to reach hoards of Reddit users with their ads, the protest is a huge problem.

The worry is that advertising on the platform could be neutered for a lot of marketers. Search is, after all, the main way people access those groups. According to data from Similarweb, more than 49% of Reddit’s traffic comes from search engines alone. 

The loss of traffic becomes even more dire considering the widespread nature of this protest on Reddit. At the time of writing, 7,742 subreddits are currently dark. True, this is a small part of the more than 100,000 active subreddits on Reddit. That said, the situation continues to shift, and the more it does the more marketers are likely to take notice. 

In simpler terms, if fewer people have access to fewer communities, it will inevitably affect the reach of the ads within them. And few things discourage advertisers more than a decline in performance. 

Rugile Zukauskaite-Zilinske, marketing team lead at hotel comparison site RatePunk, is one of them. 

He said his company has switched off all its advertising and content marketing activities on Reddit for the foreseeable future. Or at least until the blackout resolves itself or Reddit changes its policy about the third-party API apps.

Currently Reddit takes up between 10% and 15% of RatePunk’s marketing mix.

“It’s really not worth the team’s time right now, as it’s clear the platform will encounter a significant user dip during the blackout,” Zukauskaite-Zilinske said.

Another example is Casey Jones, founder and head of marketing and finance at global digital marketing company CJ&CO. Currently, around 15% of his clients are on Reddit. For some of those advertisers, the social media platform takes up around 60% of their marketing mix, while for others it’s a minimal part of their media spend. As a result, Jones said he and his team have already allocated their Reddit budgets elsewhere.

It seems as though Reddit’s (temporary) loss is in fact other platforms’ gain. Jones noted Meta and TikTok as being alternative focuses where the team can “achieve exceptional ROI for clients.” The same goes for Zukauskaite-Zilinske, who said he has already refocused efforts for the time being on the likes of LinkedIn and Quora, as well as Reddit’s tier one competitors Facebook, Instagram and TikTok. 

So far, Reddit has not changed or indicated it will change its stance on its decision to charge for access to its APIs. However most marketers expect some sort of resolution to come within a matter of days (hopefully). Regardless of when this happens, the situation will be resolved eventually. But by then the damage may have already been done. 

Karim Salama, founder of web and digital marketing agency e-innovate, made the point that if users are protesting against how the platform is run, this could lead to a negative association with ads that appear on it.

As such, Jones noted that the blackout could affect the perception of Reddit as a reliable platform for advertising. 

“The uncertainty brought about by the blackout could lead advertisers to reconsider their investment in Reddit,” he said. “However, this could be a temporary setback.”

Reddit will be hoping the same. For now, this protest looks like it could be more of a blip for advertising than a prolonged issue. The community feeds that have gone dark are just one piece of inventory Reddit runs ads on. There are trending and front page takeovers as well as the Reddit home feed. Moreover, advertisers can still target via interest groups. 

It’s a tricky time for Reddit. It’s recently been in the headlines for announcing layoffs of 5% of its employees. Meanwhile, the company is still steadily gearing up for its next IPO window. 

But how did Reddit get here?

This dark protest, if you will, came about because Reddit is making its APIs too expensive. Why does it matter? Simply because Reddit’s API has been key to helping the platform evolve and enhance services, given how slowly it has grown.

As a result, third-party apps that relied on Reddit’s API, such as Apollo, Reddit is Fun, Reddplanet and Sync, have had to announce they are (begrudgingly) shutting down due to the increased charges. They simply can’t afford to keep going anymore. 

Understandably, given that Redditors are known for their passion for the platform, this caused a stir among a number of subreddit moderators, who moderate for free, by the way, and can turn subreddits dark. With so much concern about what’s next, and with moderators wanting their voices heard, the protest was born and numerous subreddits went dark in solidarity with these apps.

“Reddit’s decision to monetize its data by charging third-party apps for API access should strike a balance between commercial interests and maintaining the platform’s unique community-driven nature,” said Jones. “The backlash from the blackout suggests that the current approach may need to be reassessed to ensure the platform’s long-term viability and continued attractiveness to advertisers.”

Reddit declined to talk on the record for this article but did share information to contextualise it.

Editor’s note: this article incorrectly said there were over 8,000 total subreddits active on Reddit. The article has been changed accordingly. 

https://digiday.com/?p=507172

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