Inside Reddit's strategy to court advertisers in Asia Pacific

Social network platform Reddit considers the Asia Pacific an essential region because of the sheer number of users.

According to GWI, about 60% of Reddit users are based in APAC. For example, the largest sub-reddit, which is a name given to discussion boards on Reddit, in Singapore is R/Singapore, with almost 980,000 members. 

Others include R/askSingapore and R/SGExams, which each have about 230,000 members, and R/singaporefi, which has 158,000 members and discusses financial independence.

Elsewhere in APAC, other sub-reddits, like R/bollyblindsandgossip, have grown 128% in membership year over year and recently reached one million members.

Meanwhile, R/IndiaCricket's membership has grown over 500% year over year, reaching 612,000 members, and R/AustralianNostalgia's membership has grown over 65% year over year, reaching 99,000 members. 

Campaign speaks to Durgesh Kaushik, vice president of international growth at Reddit, on the platform’s advertising approach in APAC and how Reddit navigates the different and often stringent data privacy regulations across the region.

Reddit’s strategy in APAC

Reddit is focused on making its platform more accessible, localised, and culturally relevant to people worldwide. That means building and enhancing the platform’s user experience in priority regions like APAC. 

Reddit is doing this through core product innovation and investment in local community experiences. The platform’s user and community growth in APAC countries has mainly been organic because of a user base of passionate and highly engaged Redditors in the region. 

“Our focus is to develop the local community ecosystem further and cater to an even broader range of interests while also enhancing what is already going on in communities like R/BollyBlindsNGossip, R/IndiaCricket, R/ChikaPH, R/asksingapore and R/AustralianNostalgia,” explains Kaushik.

“Ensuring the right foundations are in place for users and moderators is fundamental to the long-term growth of our platform and, ultimately, our ads business. We strive to drive an attractive and relevant local experience for everyone worldwide, regardless of where they live or their language. This starts with customised local expertise that people can understand and relate to.”

Contextual advertising

Reddit generates nearly all its revenue through advertising on its apps and website. In Q4 2023, 88% of its ad revenue came from real-time bidding (RTB) auctions instead of programmatic direct deals, with top-performing verticals including technology, finance, and media.

RTB is the dominant form of programmatic auction where publishers allow multiple demand-side platforms (DSPs) to bid on their inventory simultaneously via supply-side platforms (SSPs). 

This open auction format helps publishers maximise revenue by setting a minimum cost-per-thousands (CPM) and awarding impressions to the highest bidder. It is especially favoured by smaller publishers due to its ability to attract numerous potential buyers, ensuring high returns.

Conversely, direct deals involve no automated auction process. Instead, publishers offer inventory to selected advertisers at a negotiated fixed CPM, allowing them an exclusive 'first look' before the inventory hits private or open auctions. 

These deals involve direct negotiation, allowing advertisers to bid on the inventory upon an ad request. If the inventory is not purchased, it moves to the open market for auction.

Advertisers choose preferred deals because they need to target specific audiences and require flexibility due to uncertain impression volumes. Publishers also benefit from these deals because they assure a fixed price, reducing the risk of underselling. 

However, smaller publishers are more successful with open auctions due to their limited leverage and connections compared to larger publishers.

Reddit chooses RTB auctions because the platform’s growth strategy focuses on community building in the Asia Pacific region. This strategy emphasises the importance of local engagement and tailored content to drive user growth. 

Reddit has also introduced a contextual targeting tool that uses natural language processing to analyse user-generated content for interest-based keywords. Additionally, it employs the Reddit Pixel to track off-platform user behaviour. 

Despite having extensive first-party data from its users, Reddit focuses on contextual advertising rather than tracking users based on personally identifiable information. It aims to enhance ad performance and resilience to changes in the internet ecosystem.

In 2023, Reddit's revenue grew by 21% to over $804 million, driven by increased impressions from daily active users, which averaged 73.1 million in Q4. However, the company also reported a net loss of $90.8 million. 

Although profitability has been a challenge, Reddit has reduced its losses compared to previous years, with revenues of $485 million in 2021 and $667 million in 2022, accompanied by higher net losses.

Reddit is exploring new revenue streams to improve its financial standing by licensing its first-party data to third parties for advertising and training generative AI models. In February, Reddit secured a $60 million annual deal to license its content to Google for AI development, signalling progress in this strategy.

Kaushik explains Reddit’s global ads business has always been built on the belief that the platform can drive performance while respecting user privacy. 

“Identity is not the only way to drive performance. Context and interest - which Reddit’s platform is built around – are crucial to relevance and impact,” says Kaushik.

Kaushik believes there is a place on Reddit for everybody and every kind of advertiser, as he claims Reddit has more than 100,000 communities dedicated to every topic or interest imaginable,

Kaushik points to Reddit's partnerships across APAC to ensure on-the-ground sales and support teams in countries like Taiwan, Hong Kong, Cambodia, Malaysia and Vietnam, as well as a dedicated sales team in Australia. 

Kaushik explains these sellers work with advertisers seeking to reach local Reddit users and our audiences outside the region.

“We also recently introduced Reddit Pro, a free suite of tools for businesses to grow a meaningful organic presence on Reddit,” explains Kaushik.

“There’s a social listening component, so for local companies who may not be as familiar with Reddit, it’s a great way to gain insights into how their customers think and feel and inform how to best engage with Reddit audiences.  We are already seeing businesses in APAC take advantage of this new program.”

Long-term goals in APAC

For many companies, international expansion poses significant challenges for ad-based businesses due to regulatory restrictions, such as GDPR in Europe, which impact targeted advertising and consumer data use. Reddit is no exception to these challenges. 

The platform has acknowledged potential hurdles in pursuing global growth, noting that its domestic and international operations are ‘subject to increasingly complex and evolving laws’.

Furthermore, Reddit's efforts to maintain transparency about data usage as it goes public could lead to legal or ethical liabilities. 

According to the company's risk assessment, Reddit anticipates that ongoing initiatives related to data privacy, safety, security, and content review may uncover data misuse or other undesirable activities by third parties on its platform.

Kaushik stresses that to achieve substantial and sustained international growth, the user experience on Reddit must feel locally relevant, and people must be able to have conversations with anyone about the topics that interest them, no matter their language or location. 

He explains Reddit’s vision is to deliver a universal Reddit experience where people can talk to one another, regardless of their language. To that end, the platform is currently testing machine learning translations in different markets, which will guide and inform future localisation initiatives.

“We are also working with new and existing moderators across APAC to help them feel connected to the Reddit community,” explains Kaushik.

“This includes local events and moderator meet-ups, platform troubleshooting, assistance with subreddit set-up, AMA facilitation, and guidance and support for scaling their communities.”