Dive Brief:

• Reddit is now offering cost-per-click ad inventory, known as CPC, to attract advertisers to its platform, AdAge reported. CPC ads charge advertisers for each click and are most popular with direct response marketers. 
• Wayfair and Hired are two of the brands that have purchased CPC ads on Reddit in an effort to shift ad spend away from Google and Facebook. Hired is using the ads to capture more job applications, according to the company. 
• Reddit's ad revenue has grown five-times over the past three years and sales have more than doubled year-over-year, according to the report, citing a Reddit executive. 

Dive Insight:

CPC ads are the latest in a series of new ad formats that Reddit has introduced over the past few years. While the platform may be late to the CPC game, as the format has been around for about 20 years, the move signals that Reddit is serious about building an advertising platform with direct response advertisers likely to be a steady new source of revenue even if they don't tend to be big spenders. Reddit’s VP of brand partnerships Zubair Jandali told AdAge that the platform wants to attract new types of advertisers who are concerned about cost and are attracted to the lower-funnel format with the move. 

The move arrives at a time when Google and Facebook's dominant role in marketers' digital ad budgets is showing signs of weakness, suggesting there could be an opportunity for smaller platforms to make a land grab. Facebook is reeling from a series of privacy-related scandals, Google faces significant pressures in search marketing as voice becomes more important while Amazon's quickly growing ad business presents a strong third-place competitor to the duopoly for the first time. 

In this environment, Reddit's rollout of new ad formats could attract advertisers seeking to diversify their marketing budgets away from the tech companies, known as the digital duopoly. For example, some marketers have recently been shifting up to 60% of their search budgets usually allocated to Google and moving the investments to Amazon. 

Reddit began focusing on its ad business in 2016, when it had 59 people devoted to ad sales; now, there are 100, according to AdAge. In July, Reddit said it would offer “top post takeover,” allowing a brand’s content to appear on the site’s front page for 24 hours with promoted ads and banner ads at the top and sides. The company also planned to launch special topics in relevant “subreddits,” so ads can target more specific audiences. 

The CPC ads complement Reddit’s existing ad offerings, which include four other campaign objectives: reach, video view, traffic and conversions, which are monetized based on cost per thousand impressions (CPM) and cost per view. Reddit boasts more than 330 million monthly active users and 18 billion page views, as well as high engagement levels, with users spending 16 minutes per day on the site.