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Dear Reddit, Making money on the Internet is a solved problem. You just need to sell ads. Please suspend these nerdy business experiments and just focus on imp

Dear Reddit, Making money on the Internet is a solved problem. You just need to sell ads. Please suspend these nerdy business experiments and just focus on improving and promoting your ad platform. That is literally all you need to do. And even if you choose not to do that, you can achieve profitability within the next 2 months by merely moving away from AWS to a more cost-effective website hosting platform, since hosting costs are your greatest expense. Since you can easily raise revenue and cut costs at the same time, if you're not profitable in the next 2 months, it's only because you don't want to be profitable. And, hey, that's cool if your investors don't care.

ddorian43 13y ago
But the cloud(aws) allows them to synergise,autoscale,growthhack,no-harddrives(ebs),pricey bandwidth(ec2) etc.
calbear81 13y ago
Reddit has always been anti-ads especially since they feel strongly that their userbase hates ads and would actually revolt in a mass uprising if Reddit started getting more aggressive with the ads they show. I'm actually with you about them finding more cost effective ways to serve all that content. I wonder if they should think about using peer-to-peer caching using HTML5/webworkers and other distributed caching methods. Given that the community has strong support for reddit (they even give money freely via the donation bar), maybe they would be okay with allowing spare bandwidth to be used to keep the site running. On the ads side, I think the proprietary system they have is not doing them any favors when it comes to getting a piece of the ad spend pie during RFPs. I don't even know how an advertiser would begin to figure out which subreddits they should target w/o having to sit down and dive into all the stats. The other core issue I think is that reddit specifically touts the fact that you target by subreddit not by demographics/users/behavior, etc. but I think that data is extremely important to most advertisers.
- seiji 13y ago
  revolt in a mass uprising What actually happens: the old timers complain for three days then just put up with it. People still conflate online complaining with meaning and desires of the entire user base. Sadly, online comments aren't independent statistical samples from your entire user base. What's the rate again? 2% of users actively participate in sites while 98% happily browse and put up with ads?
  - rhizome 13y ago
    You're making a huge, possibly fatal, assumption about quality remaining constant.
    - seiji 13y ago
      Quality of submissions or comments? I was part of another forum-based company that went from zero advertising to full display advertising with banners and adsense (the ads brought in another $200k to $500k per month). Some of the vocal members (read: always bitchy about everything, even mild color or margin changes) complained at first, then went back to their normal bitching about everything else in the world. All changes hurt at first, but we can't not change everything forever.
      - g0lden 13y ago
        So you have one decent example where such a change didnt really alter the quality of the site, yet that doesnt magically apply to every scenario.
      - rhizome 13y ago
        Quality of the site as a whole, both subs and comments. Again, you're assuming that the presence of additional advertising will have no effect on the content. Perhaps your example webboard always sucked, you know? One additional way to look at it is to gauge whether your webboard is more popular and/or more highly trafficked than its related subreddits. This last point doesn't necessarily speak to content quality, but it does relate to the relationship and motivations of its community. A tenet of advertising is to maintain a blindspot for self-reflectivity, to assume that everything would be the same whether they were present or not. Leaving aside the economics of production, for a simple example of TV shows, a lack of advertising would enable longer shows and thus more content, which is what people presumably watch these shows for. A negligible number of people watch TV only for the advertising content, and I think we can agree that a station that is only comprised of advertising would not be very popular. QVC will never get the ratings that "Duck Dynasty" does, much less one composed entirely of 30sec spots.
- weisser 13y ago
  Perhaps most interesting is the fact that every Hipmunk advertisement I've seen on Reddit has some of the harshest comments.
jmduke 13y ago
My understanding about the advertising ecosystem on Reddit is such that the returns on the actual advertising platform are far, far worse than grassroots marketing (not even talking about sneaky stuff -- participating in the community, doing AMAs, generally just hanging around).
- orf 13y ago
  I've run a few adverts on Reddit and the returns were far better than Adsense, we got a lot of long-time customers through Reddit and plenty of clicks. I really like the fact you can comment on the adverts as if they were a post, this lets people discuss (and hopefully praise) your company.
- Tohhou 13y ago
  There are reddit admins who poison reddit ads, because they can freely place ads on subreddits without cost. It's annoying. The reddit ads system could be far better and without the corruption. It does cost more and is less effective than Facebook ads even for very specific subreddits, and it costs a ton more than it's worth even when there is no one else buying ad space in a subreddit. Correct me if I'm wrong if this has changed.
Major_Grooves 13y ago
They could think about allowing geo-targetting of adverts. I'd love to advertise on certain subreddits, but only if I could specify the adverts only show in the UK. There must be people who feel the same in other countries. Pretty much every comparable platform - e.g. StumbleUpon - allows geotargetting of adverts. I'm sure they're missing out on loads of advertisers.
jokoon 13y ago
depends on the ads. I think they're afraid of adblock
codingdave 13y ago
Reddit's problem is not its business model. It is that they are more focused on being a household name than being a successful business. They are running under the old assumption that if you get enough eyes on your site, somehow you will monetize it. But that assumption is based on the premise that your visitors are coming to your site because you offer something of value. They need to refocus on doing exactly that - offering value to people, not just entertainment. Entertainment drives ads, but true value drives direct cash flow. The gifts are really just a variation on the ad theme - get enough traffic that people will leave the core functions of the site, and go buy something. This is dangerous - both gifts and gold subscriptions are making an income by monetizing the pop culture value of reddit. If/when reddit is no longer a hub of pop culture, those income streams will vanish. They have some time, while those income streams still work, to develop core functions that are a valuable product in their own right, and learn how to monetize those functions. I'd encourage them to start on that path immediately, so they can stabilize themselves as a real business before their pop culture status fades.
raverbashing 13y ago
" you can achieve profitability within the next 2 months by merely moving away from AWS to a more cost-effective website hosting " Wow, are they really doing that???! I can understand Netflix doing it, but for Reddit it's like flushing money really Rackspace, make them an offer!
dreamfactory 13y ago
Online display advertising is dead, even the biggest web publishers are trying to develop alternative streams and get off it. The money is now all in commerce and engagement (leading to commerce).

ddorian43 13y ago

But the cloud(aws) allows them to synergise,autoscale,growthhack,no-harddrives(ebs),pricey bandwidth(ec2) etc.

calbear81 13y ago

Reddit has always been anti-ads especially since they feel strongly that their userbase hates ads and would actually revolt in a mass uprising if Reddit started getting more aggressive with the ads they show. I'm actually with you about them finding more cost effective ways to serve all that content. I wonder if they should think about using peer-to-peer caching using HTML5/webworkers and other distributed caching methods. Given that the community has strong support for reddit (they even give money freely via the donation bar), maybe they would be okay with allowing spare bandwidth to be used to keep the site running. On the ads side, I think the proprietary system they have is not doing them any favors when it comes to getting a piece of the ad spend pie during RFPs. I don't even know how an advertiser would begin to figure out which subreddits they should target w/o having to sit down and dive into all the stats. The other core issue I think is that reddit specifically touts the fact that you target by subreddit not by demographics/users/behavior, etc. but I think that data is extremely important to most advertisers.

seiji 13y ago
revolt in a mass uprising What actually happens: the old timers complain for three days then just put up with it. People still conflate online complaining with meaning and desires of the entire user base. Sadly, online comments aren't independent statistical samples from your entire user base. What's the rate again? 2% of users actively participate in sites while 98% happily browse and put up with ads?
- rhizome 13y ago
  You're making a huge, possibly fatal, assumption about quality remaining constant.
  - seiji 13y ago
    Quality of submissions or comments? I was part of another forum-based company that went from zero advertising to full display advertising with banners and adsense (the ads brought in another $200k to $500k per month). Some of the vocal members (read: always bitchy about everything, even mild color or margin changes) complained at first, then went back to their normal bitching about everything else in the world. All changes hurt at first, but we can't not change everything forever.
    - g0lden 13y ago
      So you have one decent example where such a change didnt really alter the quality of the site, yet that doesnt magically apply to every scenario.
    - rhizome 13y ago
      Quality of the site as a whole, both subs and comments. Again, you're assuming that the presence of additional advertising will have no effect on the content. Perhaps your example webboard always sucked, you know? One additional way to look at it is to gauge whether your webboard is more popular and/or more highly trafficked than its related subreddits. This last point doesn't necessarily speak to content quality, but it does relate to the relationship and motivations of its community. A tenet of advertising is to maintain a blindspot for self-reflectivity, to assume that everything would be the same whether they were present or not. Leaving aside the economics of production, for a simple example of TV shows, a lack of advertising would enable longer shows and thus more content, which is what people presumably watch these shows for. A negligible number of people watch TV only for the advertising content, and I think we can agree that a station that is only comprised of advertising would not be very popular. QVC will never get the ratings that "Duck Dynasty" does, much less one composed entirely of 30sec spots.
weisser 13y ago
Perhaps most interesting is the fact that every Hipmunk advertisement I've seen on Reddit has some of the harshest comments.

jmduke 13y ago

My understanding about the advertising ecosystem on Reddit is such that the returns on the actual advertising platform are far, far worse than grassroots marketing (not even talking about sneaky stuff -- participating in the community, doing AMAs, generally just hanging around).

orf 13y ago
I've run a few adverts on Reddit and the returns were far better than Adsense, we got a lot of long-time customers through Reddit and plenty of clicks. I really like the fact you can comment on the adverts as if they were a post, this lets people discuss (and hopefully praise) your company.
Tohhou 13y ago
There are reddit admins who poison reddit ads, because they can freely place ads on subreddits without cost. It's annoying. The reddit ads system could be far better and without the corruption. It does cost more and is less effective than Facebook ads even for very specific subreddits, and it costs a ton more than it's worth even when there is no one else buying ad space in a subreddit. Correct me if I'm wrong if this has changed.

Major_Grooves 13y ago

They could think about allowing geo-targetting of adverts. I'd love to advertise on certain subreddits, but only if I could specify the adverts only show in the UK. There must be people who feel the same in other countries. Pretty much every comparable platform - e.g. StumbleUpon - allows geotargetting of adverts. I'm sure they're missing out on loads of advertisers.

jokoon 13y ago

depends on the ads. I think they're afraid of adblock

codingdave 13y ago

Reddit's problem is not its business model. It is that they are more focused on being a household name than being a successful business. They are running under the old assumption that if you get enough eyes on your site, somehow you will monetize it. But that assumption is based on the premise that your visitors are coming to your site because you offer something of value. They need to refocus on doing exactly that - offering value to people, not just entertainment. Entertainment drives ads, but true value drives direct cash flow. The gifts are really just a variation on the ad theme - get enough traffic that people will leave the core functions of the site, and go buy something. This is dangerous - both gifts and gold subscriptions are making an income by monetizing the pop culture value of reddit. If/when reddit is no longer a hub of pop culture, those income streams will vanish. They have some time, while those income streams still work, to develop core functions that are a valuable product in their own right, and learn how to monetize those functions. I'd encourage them to start on that path immediately, so they can stabilize themselves as a real business before their pop culture status fades.

raverbashing 13y ago

" you can achieve profitability within the next 2 months by merely moving away from AWS to a more cost-effective website hosting " Wow, are they really doing that???! I can understand Netflix doing it, but for Reddit it's like flushing money really Rackspace, make them an offer!

dreamfactory 13y ago

Online display advertising is dead, even the biggest web publishers are trying to develop alternative streams and get off it. The money is now all in commerce and engagement (leading to commerce).