Reddit Tests Ads In In-app Search Results
Reddit is testing search-result ads with a limited group of advertisers as declining Google referrals put pressure on its growth.
Reddit is testing ads in its in-app search results, giving a limited group of advertisers a new way to reach people looking for products, recommendations and other information. The move comes as the company faces declining traffic from Google and looks for more revenue from people already using its platform, according to Engadget and TechCrunch.
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How the search ads will work
Reddit says the initial test may select ads using factors that include how closely they relate to a search query. A search for “espresso station,” for example, could bring up ads for espresso machines, coffee or mugs. TechCrunch reports that a search for “home office setup” could similarly produce ads for monitors, desks or office chairs.
Reddit has not said how frequently the ads will appear. Engadget notes that the company’s screenshots showed them near the top of search results. Only a select group of eligible advertisers can participate at first, while Reddit assesses how users respond and adjusts the format.
Why Reddit is adding placements
Engadget reports that Reddit sees an opportunity to reach users showing strong purchase intent when they search the platform for buying advice. TechCrunch frames the test as part of an effort to earn more from existing users after Reddit warned investors about falling search referrals and issued a weaker-than-expected revenue forecast.
According to TechCrunch, Reddit beat Wall Street’s third-quarter revenue and earnings-per-share estimates, but its fourth-quarter sales forecast of $1 billion to $1.03 billion fell short of expectations of $1.05 billion. The outlet reports that global daily active users were flat from the previous quarter at 130.3 million. U.S. daily active users fell from 53.2 million in the second quarter to 50.7 million in the third and were down 2% from a year earlier.
Both outlets connect the traffic decline to Google’s AI-powered search features, which can answer queries without sending users to Reddit. Engadget reports that Reddit specifically cited Google’s AI Mode as a cause of significant declines in search traffic.
A broader shift toward logged-in use
The ad test follows Reddit’s announcement that it plans to restrict most of its content to logged-in users. TechCrunch reports that the transition will be gradual, beginning in markets outside the U.S. It says the change could also make ads more valuable by giving advertisers more information about users’ interests and behavior.
Reddit has also moved to limit unauthorized scraping, according to both reports. Engadget says the company has restricted its developer platform and Old Reddit as it responds to scraping. The search-ad test and planned login requirement show how Reddit is changing both the way people access its content and the way it sells advertising as AI reshapes search traffic.
Sources
This story was compiled by AI from the reports below. Read the originals for the full details.