Reddit Now Valued at $10b with New Funding Round
Reddit has reported a new funding round, which will increase its valuation to $10 billion, and provide it with the capital that it needs as it looks forward to the next stage of its overall development.
As explained by Reddit:
“We’re making strategic investments to grow Reddit and our business, including expanding internationally, innovating new ways to foster community, and bolstering our advertising offerings and capabilities. We’ve been making a great deal of progress on all fronts – from hiring our first chief financial officer and building out a comprehensive finance function, to expanding internationally in the UK, Canada, Australia, and more countries to come.”
The platform’s growing potential is shown by the value, but it still lags far behind other social media applications in terms of growth potential, according to the report. Twitter, for example, has a market capitalization of $52 billion, while Snapchat has a market capitalization of $118 billion. The value as a result likely reflects the platform’s present position in the wider digital advertising market – but, as Reddit points out, the company is striving to increase its potential over time.
And it seems that their efforts are bearing fruit. As previously stated, Reddit said that it has achieved its first $100 million advertising income quarter this year, representing a 192 percent increase over the same time in 2020.
Moreover, we’re making significant investments in our products and broadening the Reddit experience to include new methods for communities to interact via video and audio,” says the company.
It’s true that Reddit attempted to capitalize on the Clubhouse-led audio social trend earlier this year with the introduction of ‘Reddit Talk,’ which was designed to enable audio rooms inside subreddits. It’s also currently experimenting with live-streaming through its RPAN project.
Additionally, in April of last year, Reddit introduced a text-based community chat feature to encourage greater participation.
However, from a commercial standpoint, the app’s primary emphasis has been on cleaning up its platform in an attempt to dispel past impressions that it facilitates the spread of more contentious aspects.
The biggest move on this front was the revision of its rules around hate speech last June, which resulted in the removal of thousands of subreddits. That, at least in part, came as part of the broader discussion of the Black Lives Matter movement, and the role that social platforms have played in amplifying hate speech.
A side effect of this has been that it has allowed Reddit to better address some of the more problematic communities, which has resulted in increased advertiser trust. Reddit has also been working to provide more specific targeting and exclusion tools to address advertiser concerns about ad placement.
Clearly, based on the increase in ad income received by Reddit, such efforts are bearing fruit, even if they do seem to have had a negative effect on use to some extent. According to the platform’s December report, it now boasts 52 million daily active users, which is a significant change from the platform’s prior reporting, which only included monthly active user statistics.
The site had 422 million monthly active users in December of last year, before it implemented its subreddit culling policy. Moreover, although the two numbers are not directly comparable, it seems that there has been at least a little decrease in overall audience reach – despite Reddit reporting a 44 percent year-over-year gain in in-app interaction.
Even if fewer individuals are utilizing it, it is still effective. Overall, the ones that are active are becoming more active, and the platform’s wider clean-up initiatives seem to be aiding in steering it in the right direction and attracting advertising attention. And if Reddit can maintain or increase its daily active users (DAU) number in 2021, it will be able to attract more advertising money and advance its commercial objectives.
Would it be wise to keep Reddit on your radar as a possible ad placement option? It is certainly worth your time to look at.
There’s a subreddit for almost every topic, and each has a vibrant community of people who are passionate about it. And they may well open up a new channel of communication with your target audience – or, at the very least, offer you with an additional outlet for research and analyzing important trends.
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