Reddit Advertising Updates

Reddit Advertising Updates

Reddit recently went public, and as a result, investors and Redditors alike have been buzzing about the platform’s future. CEO Steve Huffman has doubled down on advertising to address the future; consequently, new advertising tools have been announced. These aim to enhance advertising reach on the platform and entice Small and Midsize Businesses to join. Marco Cunalata, Media Supervisor at M&C Saatchi Performance, provided his perspective on the potential of this new tool. We’ve divided these enhancements into three main sections: Frequency, Targeting, and Ad Placements.

1. Frequency

Starting with the easiest solution, an increase in available inventory. Reddit has always struck a good balance with its user base, but in light of the IPO, a need to drive more impressions has taken precedence. For marketers, this will largely mean:

  • Expanded reach & frequency of your ads

  • Potential drop in CPMs

What does increased frequency mean for advertisers?

With this increase in frequency, strategic use of this new inventory will be key. Advertisers should work with their media agency and Reddit reps to measure frequency and ensure you aren’t overdelivering to your users. Ad fatigue plagues all platforms, but Reddit users, in particular, are very vocal about how often they get marketed to. Test the efficacy of more or less frequency over time and see if your conversion rates increase.

2. Targeting

AI & Large Language Models (LLM) are the industry’s biggest buzzwords at the moment, and Reddit has not fallen short of incorporating them into its stack. Reddit has been feeding content on the site through these tools with the goal of optimizing contextual consumer targeting by leveraging their rich 1st-party data. As a text-heavy platform, it will be interesting to see how this plays out in the next few months as the models learn and the data teams envision ways to apply them to campaigns.

Reddit has also introduced a new buying method called Lowest Cost, which is still in beta. This option automatically adjusts the bid based on the budget and auction dynamics without needing to set a bid or bid cap manually. Across Mobile App Install campaigns, advertisers have seen an increase of +8% CTR, -6% CPC, and +10% more installs.

What do advertisers need to know?

At M&C Saatchi Performance, our recommended approach is always to test, learn, and let data inform the next step. One approach could be to run two ad groups (one with a regular cost cap and the other using Lowest Cost) simultaneously, under the same campaign and leveraging the same assets to effectively A/B test and see if one does better than the other. To avoid cannibalization, run across subreddits that are categorically similar but consist of different communities.

For example, if you’re a sports advertiser, you can run a campaign categorically across Football but have one ad group target College vs. the NFL or East Coast teams vs. West Coast teams at similar budgets to achieve the same reach.

3. Ad Placements

Lastly, the newest addition to the Reddit ad ecosystem is the “Free Form Ad” unit. This is effectively a sponsored Reddit Megathread. This placement offers a huge amount of flexibility, with varying media options and bespoke templates. It is touting a 28% increase in CTR compared to other units.

What do advertisers need to be aware of?

We recommend this to advertisers running brand media and have the available budget to give this placement a test. Free Form Ads and will require testing. If you’re focused on the lower funnel with a smaller budget, it might be better to wait until more benchmarking is available to evaluate whether this format could work for your brand.

General advertising updates

Reddit has committed to helping advertisers with their Business Growth Toolkit. This means advertisers  using Reddit Pro (currently in beta) have access to an interface with multiple tools via their existing or newly-established Reddit user account, including:

  • AI-powered insights:
    • Fueled by Reddit’s over 16 billion posts and comments, which surface in the top communities, trending topics, and conversations on Reddit that are relevant to specific categories and, in some cases, specific brands. Businesses can use these insights to join or start conversations, connect with new and existing audiences, and inform the way they interact with and show up on the platform.
  • Performance analytics:
    • [Enabling] businesses to analyze organic post-performance, inform their strategy, and grow engagement.
  • Publishing tools:
    • Help with drafting and scheduling of profile posts, and provide simple steps for businesses to start contributing to Reddit communities.

What should advertisers do to optimize these updates?

Work with your agency and internal stakeholders to gather reporting, demographic, interest, or other audience data to help inform platform planning.

Depending on the findings, hone in on targeting relevant communities, test out new audience segments, and leverage trends.

Lastly, for developers, Reddit has introduced a more seamless way to leverage Reddit’s 1st party data by partnering with Tealium. There has been an update to the Reddit Pixel that will pass more granular data signals back to your relevant platforms or partners via the Conversion API. With the looming threat of cookie deprecation, this is a good tool to future proof the platform and mitigate the potential impact of signal loss for campaign optimization purposes.

Do you have any questions about how we can help your brand grow?