Reddit reaches for profits through a geek-culture bazaar

http://reuters.com/article/2013/12/28/us-reddit-gifts-idUSBRE9BR04F20131228

by akhiluk • 13 years ago

33 45 13 years ago

seunosewa• 13 years ago

Dear Reddit,

Making money on the Internet is a solved problem. You just need to sell ads. Please suspend these nerdy business experiments and just focus on improving and promoting your ad platform. That is literally all you need to do.

And even if you choose not to do that, you can achieve profitability within the next 2 months by merely moving away from AWS to a more cost-effective website hosting platform, since hosting costs are your greatest expense.

Since you can easily raise revenue and cut costs at the same time, if you're not profitable in the next 2 months, it's only because you don't want to be profitable. And, hey, that's cool if your investors don't care.

ddorian43• 13 years ago

But the cloud(aws) allows them to synergise,autoscale,growthhack,no-harddrives(ebs),pricey bandwidth(ec2) etc.

calbear81• 13 years ago

Reddit has always been anti-ads especially since they feel strongly that their userbase hates ads and would actually revolt in a mass uprising if Reddit started getting more aggressive with the ads they show.

I'm actually with you about them finding more cost effective ways to serve all that content. I wonder if they should think about using peer-to-peer caching using HTML5/webworkers and other distributed caching methods. Given that the community has strong support for reddit (they even give money freely via the donation bar), maybe they would be okay with allowing spare bandwidth to be used to keep the site running.

On the ads side, I think the proprietary system they have is not doing them any favors when it comes to getting a piece of the ad spend pie during RFPs. I don't even know how an advertiser would begin to figure out which subreddits they should target w/o having to sit down and dive into all the stats. The other core issue I think is that reddit specifically touts the fact that you target by subreddit not by demographics/users/behavior, etc. but I think that data is extremely important to most advertisers.

seiji4• 13 years ago

revolt in a mass uprising

What actually happens: the old timers complain for three days then just put up with it.

People still conflate online complaining with meaning and desires of the entire user base. Sadly, online comments aren't independent statistical samples from your entire user base.

What's the rate again? 2% of users actively participate in sites while 98% happily browse and put up with ads?

weisser• 13 years ago

Perhaps most interesting is the fact that every Hipmunk advertisement I've seen on Reddit has some of the harshest comments.

jmduke• 13 years ago

My understanding about the advertising ecosystem on Reddit is such that the returns on the actual advertising platform are far, far worse than grassroots marketing (not even talking about sneaky stuff -- participating in the community, doing AMAs, generally just hanging around).

orf• 13 years ago

I've run a few adverts on Reddit and the returns were far better than Adsense, we got a lot of long-time customers through Reddit and plenty of clicks.

I really like the fact you can comment on the adverts as if they were a post, this lets people discuss (and hopefully praise) your company.

Tohhou• 13 years ago

There are reddit admins who poison reddit ads, because they can freely place ads on subreddits without cost. It's annoying.

The reddit ads system could be far better and without the corruption. It does cost more and is less effective than Facebook ads even for very specific subreddits, and it costs a ton more than it's worth even when there is no one else buying ad space in a subreddit.

Correct me if I'm wrong if this has changed.

Major_Grooves• 13 years ago

They could think about allowing geo-targetting of adverts. I'd love to advertise on certain subreddits, but only if I could specify the adverts only show in the UK. There must be people who feel the same in other countries. Pretty much every comparable platform - e.g. StumbleUpon - allows geotargetting of adverts. I'm sure they're missing out on loads of advertisers.

jokoon• 13 years ago

depends on the ads.

I think they're afraid of adblock

codingdave• 13 years ago

Reddit's problem is not its business model. It is that they are more focused on being a household name than being a successful business. They are running under the old assumption that if you get enough eyes on your site, somehow you will monetize it.

But that assumption is based on the premise that your visitors are coming to your site because you offer something of value. They need to refocus on doing exactly that - offering value to people, not just entertainment. Entertainment drives ads, but true value drives direct cash flow.

The gifts are really just a variation on the ad theme - get enough traffic that people will leave the core functions of the site, and go buy something. This is dangerous - both gifts and gold subscriptions are making an income by monetizing the pop culture value of reddit. If/when reddit is no longer a hub of pop culture, those income streams will vanish.

They have some time, while those income streams still work, to develop core functions that are a valuable product in their own right, and learn how to monetize those functions. I'd encourage them to start on that path immediately, so they can stabilize themselves as a real business before their pop culture status fades.

raverbashing• 13 years ago

" you can achieve profitability within the next 2 months by merely moving away from AWS to a more cost-effective website hosting "

Wow, are they really doing that???!

I can understand Netflix doing it, but for Reddit it's like flushing money

really

Rackspace, make them an offer!

dreamfactory4• 13 years ago

Online display advertising is dead, even the biggest web publishers are trying to develop alternative streams and get off it. The money is now all in commerce and engagement (leading to commerce).

fuckpig2• 13 years ago

Reddit's real product has always been its hipness. You introduce something on Reddit, and 1000 bots-or-people "upvote" it, and suddenly the press picks up on the story.

How does this translate into dollars and cents? Reddit could use its platform to popularize new hip counterculture products. When advertisers purchase ad space, the real ads would be in the links and comments.

All it takes is about a dozen people to upvote something within the first 8-10 minutes after it is posted and it stands a good chance of "going viral." That's harder to sell than ads, but perhaps more valuable.

Havoc3• 13 years ago

Reddit's real product has always been its hipness.

I disagree. Their strength (in my view) is that its a build your own community DIY. If you feel strongly about turnips then start a turnip subreddit. vb forum etc doesn't have that flexibility.

EDIT: FML...someone claimed /r/turnips already.

onebaddude• 13 years ago

I disagree.

I think it's both. Your turnip site instantly becomes the hippest turnip site due to it's location on Reddit.

fuckpig2• 13 years ago

I'll just leave this here:

http://www.reddit.com/r/FRUITUNION

onedev• 13 years ago

Two words for ya reddit: "Feed Ads" (aka inserting ads in between pieces of organic content/stories)

It works for Facebook, it works for Twitter, it will work for you. The only thing is you have to be careful how you present it and design it into the existing platform.

minimaxir• 13 years ago

Feed Ads would cause a user revolt overnight.

Reddit is caught between a rock and a hard place since users like Reddit because of the nonintrusive ads.

jds375• 13 years ago

It's so true. It would be much to risky to do that. Reddit could risk a Digg-like exodus if people got too pissed off. I think a more viable strategy would be to somehow expand the reach of reddit so that it isn't merely a replaceable social media/news site.

loceng• 13 years ago

Within a few minutes...

Havoc3• 13 years ago

The tech posts by their admins always make for good reading. Initially I thought "how hard can it be?", but they have to generate so much of their stuff dynamically that I'd be seriously impressed if they can make the numbers work. Especially since that dynamic complexity doesn't scale all that well.

bhaumik• 13 years ago

How would the HN community react if any of the ideas suggested in this thread were implemented by PG?

Non-redditors need to understand the overwhelming revolt against any sort of advertisement in the reddit community. Yishan Wong (CEO) had to respond to one of the "top" comments when this article was posted in r/technology[1].

While reddit "fans" will support the company through "Reddit Gold"[2], advertisements in the form of "sponsored links" or "feed ads" doesn't seem to work under the beloved format [ex: 3]. If you're interested in learning about Condé Nast and other investors , I found a "myth busters" blog post [4].

[1]http://www.reddit.com/r/technology/comments/1tvfze/reddit_is...

[2]http://blog.reddit.com/2013/10/thanks-for-gold.html

[3]http://www.reddit.com/comments/1o6f63/now_you_can_fly_histor...

[4]http://blog.reddit.com/2013/08/reddit-myth-busters_6.html

candeira• 13 years ago

Some time ago I read that Andover.net/Geeknet made most of its money via ThinkGeek. It still didn't made the company any profit [1].

[1] http://beta.fool.com/ddelony/2012/09/20/will-selling-slashdo...

But making profit off selling stuff is only half the challenge. As the sale of Slashdot to Dice Holdings illustrates, the Internet doesn't quite like cross-subsidies. That's what's undoing traditional media: in newspapers, the cartoon page attracted viewers and the real estate listings attracted paying advertisers, and between those the paper rag could pay for the foreign correspondents, or for the reporter at Town Hall. Now it's everyone for themselves, and some outlets make writers responsible for their own traffic, article per article. That's how we end up with listicles all over the place.

But I digress. Reddit has two challenges: one, make the profit off sales that it can't make off running The Front Page of the Internet. Two, maintain the cross-subsidy once the managers realise they have a profitable store weighed down by this money-losing forum, so hey, "couldn't we make more profit if we didn't have the forum?"

ChrisNorstrom• 13 years ago

They're better off creating a job board for the entire site. I've tried advertising on Reddit 3 times and each has been a complete and total failure. It's BOTH the users and the method of displaying which is leading to poor..er...no results.

===== Reddit Users =====

● Advertising on Reddit is equivalent to a business hustler in a suit approaching you at a hackathon. Ads are unwelcome because no one on Reddit is there to buy anything.

● Even if you get lots of traffic, there's no conversion. Out of 1,000 unique visits I've had ->1<- person actually bought a calendar. I joked around saying "I'd probably get more sales advertising on a porn site" and just for the hell of it actually went through with it. Gay porn sites seem to be the cheapest on blogads.com with the lowest cost per impressions + high impressions & big community. So I booked a 1 week spot on "TheBananaBlog". I actually got 3 sales from it. So advertising a calendar on a gay porn site is more cost effective than advertising on Reddit. Think about that next time before you try to buy ads on Reddit.

===== Reddit's Ad Methods Flaws =====

● Reddit doesn't understand what an "ad" is. Plain and simple. It tries to fit "ads" into a "content" form factor and group them into the "content feed" where they DO-NOT-BELONG. Users don't like this. They don't like this on Reddit and they don't like it anywhere else on the web.

● By mixing ads and content Reddit is making their advertisers seem deceitful and dishonest. Like we're trying to sneak a money making scheme into their pristine community of readers. When really we're supporting their community.

● Reddit lacks version control and the ability to test out different ad type content.

● Too many Reddit users tend to be "dough bags". The type that always ask you for food/pizza/ride/cigarette/drink and never repay you. I'm sorry but it's true. They'll rip images from people's personal blogs and link to them directly rather than linking to that person's page with the entirety of the content. Or they'll just re-upload stolen content to imgur where all their images are hosted. Their excuse is that they won't want "blog-spam". Everything to them is blog-spam -_-. They like to take and not give back when it comes to content. So advertising to this crowd will get you no where.

===== Possible Solution =====

● Use 1 traditional ad on the right side with "Today's Community Supporter:" above it. Make sure the ad doesn't use "ad like code", rotate, and is a static image that way it's much less likely to get blocked by ad blockers.

● Nothing. Reddit was like this since the beginning. I remember Reddit back when it was just 1 reddit (before subreddits) and the community behavior was similar. Snarky, condescending, anti-entrepreneur.

What makes Hacker News awesome is the community's understanding of self promotion: Posting a link or plug to your startup/business when relevant is acceptable: The calendar I mentioned above is here at my custom webstore: http://dayonepp.com/ you can use coupon code: "hn" to get $3 off.

Reddit reaches for profits through a geek-culture bazaar

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