Content material licensing agreements now account for about 10% of Reddit’s complete income, the corporate’s CRO Jen Wong advised ADWEEK in an unique interview Wednesday.
“It’s a small a part of our income—I’ll name it 10%. For a enterprise of our dimension, that’s materials, as a result of it’s worthwhile income,” Wong mentioned.
The social platform—which on Wednesday reported a 71% year-over-year elevate in fourth-quarter income—has been “very considerate” in regards to the AI builders it chooses to work with, Wong mentioned. So far, the corporate has inked two content material licensing offers: one with Google for a reported $60 million, and one with ChatGPT father or mother OpenAI.
Reddit has elected to work solely with companions who can comply with “particular phrases … which can be actually essential to us.” These phrases embrace person privateness protections and situations concerning “how [Reddit is] represented,” Wong mentioned.
Whereas licensing agreements with AI corporations supply a worthwhile enterprise alternative for Reddit, promoting stays the corporate’s core income driver.
A lot of Reddit’s $427.7 million This fall revenues have been generated by the continuing enlargement of its promoting enterprise. And its advert income as a complete grew 60% YoY, underscoring the platform’s rising enchantment to manufacturers.
The corporate, which IPOed final March, has targeted on increasing its adverts enterprise. In January it debuted AMA Adverts and Professional Traits to woo mainstream manufacturers. AMA Adverts lets manufacturers host Q&A classes with built-in RSVP and reminder options, whereas Professional Traits allows companies to watch model mentions and viral discussions on Reddit.
Reddit has additionally invested vital assets into machine studying and AI to reinforce advert concentrating on and person engagement. It acquired Memorable AI in August, a startup that predicts person engagement with advert inventive, to bolster advert effectiveness on Reddit.
The efforts are paying off. The corporate has doubled its click on quantity and its conversion quantity YoY and recorded vital progress throughout channels, geographical areas, and verticals in 2024. A specific vibrant spot has been small- to medium-sized advertisers, which drove “outsized progress” throughout This fall, based on Wong.
Reddit is targeted on logged-in customers, and extra automation
Serving to to speed up advert income progress is Reddit’s rising visitors. Whereas Reddit’s This fall person progress got here in below Wall Road projections, inflicting shares to dip, its weekly lively uniques grew 42% YoY to over 379 million guests. Common income per distinctive customer was $4.21 through the quarter, up 23% from the prior 12 months.
Whereas Google is “properly reinforcing” Reddit’s progress in visitors, Wong mentioned, she added that the positioning’s logged-in customers, which have grown 27% year-over-year, are “the bedrock of our enterprise.”
Within the coming months, Reddit plans to develop its personal machine studying and AI capabilities—efforts that Wong believes will assist maintain its adverts enterprise progress.
“We’re exploring end-to-end automation, particularly for efficiency aims, that simply make it simpler to activate on our promoting platform,” she mentioned.
