Dive Brief:

• Social platform Reddit is on track to reach $119 million in net U.S. ad revenue in 2019, a 55% increase over 2018, and its ad business is projected to more than double to $261.7 million by 2021, according to an eMarketer analysis shared with Marketing Dive. However, that only represents 0.1% of the U.S. digital ad market.
• Compared to other websites, more of Reddit's revenue comes from desktop and laptops, since its mobile app launched later. This year, mobile will account for 57% of its ad revenue, totaling $67.8 million.
• User growth on Reddit is projected to slow to "single digits" beginning in 2019. EMarketer considers users to be those who have a Reddit account and log in at least monthly. In the U.S., 26.4 million people use the platform at least once a month. When logged-out users are factored in, the platform’s reach can be up to three-times larger.

Dive Insight:

Reddit has been revamping its platform and launching new ad products over the past year, and these efforts seem to be paying off. Advertisers are attracted to the platform for its large audience of tech-savvy consumers who may be tough to reach on other platforms. While eMarketer only counts monthly logged-in users, Reddit has said it has more than 330 million monthly active users and 18 million monthly page views. Users also reportedly spend an average of 16 minutes per day on the site watching videos, interacting in subreddits, upvoting and downvoting, and commenting.

As advertisers up their digital ad spend, many marketers are seeking out alternatives to the digital duopoly of Google and Facebook, following several brand safety, privacy and transparency issues on the sites. More marketers are investing in sites like Amazon and others. Reddit's "open internet" ethos has often created brand safety issues that the site has tried to mitigate, a factor that could hold back growth.

"While [that ethos] has yielded organic growth among a hard-to-reach audience, it has also meant a reality where controversial content is the norm. And in a news climate where missteps can tarnish results, that makes some digital advertisers nervous," eMarketer forecasting director Monica Peart said in a statement.

Still, Reddit is clearly looking to drive more ad revenue and recently rolled out several new ad offerings including "top post takeover," special topics in subreddits and the ability for brands to sponsor the site's popular Ask Me Anything. Reddit also offers cost-per-click ad inventory, where advertisers are charged for each click — a format popular with direct response marketers.

While Reddit accounts for just 0.1% of the U.S. digital ad market, marketers are showing more interest in the platform, especially as brands are seeing high engagement levels. For example, Pernod Ricard’s Absolut saw KPIs double the Reddit average, with video view rates as the top performance indicator for 30-second native ads. Video completion rates on eight- to 10-second videos were 2.5-times higher than benchmarks, and 70% of the views were on mobile. Absolut also saw an increase in "top of mind" awareness.