Reddit: How To Monetize a Marketer’s Goldmine

We have a fun one today: a deep dive on Reddit. Yes, we did another product whose cultural influence far outweighs the revenue it generates!

I’m joined by friend of the pod, Dr. Marcus Collins, who used Reddit for his doctoral dissertation. You can listen here or read below for highlights.

Can Reddit Avoid the Inevitable?

What a run. From 2019 to 2024, Reddit's annual revenue grew tenfold from $100 million to $1 billion. The twenty-year-old company also had its first profitable quarter in 2024. It's an impressive feat, especially for a product that many brands once wanted nothing to do with!

Once upon a time, Reddit was the Woodstock '99 of social media. There was so much hate speech, so much aggression, and so much porn. But most things that start as fringe either fade to irrelevance or slowly become mainstream. Reddit did the latter and has reaped the rewards. If users want to read a sponsored post, they can go to Google. If they want authenticity, though, there's a thoughtful reply to a Reddit thread that discusses the exact question that's on their mind.

Despite its success, the "front page of the internet" still has plenty of challenges ahead. In early 2025, the Reddit company lost half of its market cap (over $40 billion) in just two months. This downturn followed a disappointing Q4 2024 when Reddit missed its user growth target due to a significant tweak in Google's search algorithm. The change reduced visibility for Reddit threads in search results, cutting off a major source of new user acquisition. That's the last thing that Wall Street analysts want to hear, especially when it finally started to feel like the platform had built a real business.

The Monetization Dilemma

This situation raises the question: is Reddit truly on the verge of capitalizing on the secret sauce that the rest of social media can't deliver? Or is it a glorified "Google search wrapper" whose cultural value will always exceed its shareholder value?

Reddit's unique value proposition lies in its community-driven content creation and curation. Unlike platforms that rely on influencers or algorithmic feeds, Reddit thrives on collective knowledge and diverse perspectives, often from subject matter experts who share insights freely. This authenticity is what keeps users coming back and what Google's algorithm has historically rewarded.

The tension between monetization and user experience exists in most social media apps, but it's strongest in Reddit. It's a text-based platform full of communities with anonymous accounts who say things online they wouldn't say otherwise. Plus, it attracts tech-savvy users who are statistically less likely to engage with display ads and more likely to use ad-blockers. You arguably couldn't build a social media platform that's harder to monetize.

The Enshittification

In our podcast, Marcus and I, who both started using the product in the late 2010s, still think it's useful and great. But the OGs who have been on the platform since its early days already believe that the product has gone downhill from the glory days. The API is now closed off to third parties, eliminating beloved third-party apps like Apollo, and the ads are more prevalent and intrusive. The way they feel about Reddit is how I feel about the early days of Facebook before it printed money through its ads.

The outlook on Reddit is a Rorschach test among day traders. Is it inevitable that the 3rd most-visited website in the U.S. and the sixth most-visited website in the world will figure out monetization like Facebook did? Or was it overvalued to begin with, and the ceiling is quite limited given the product's characteristics?

Facebook succeeded by building a sophisticated advertising platform with precise targeting capabilities and by expanding into new territories like Instagram and WhatsApp. Reddit could potentially follow a similar path by leveraging its rich user data while introducing new revenue streams such as Reddit Premium offerings, e-commerce integration, data licensing, and deeper brand engagement.

Personally, I do see a brighter future for Reddit. It may never become a $1 trillion or even a $100 billion company. But Reddit can be a sustainable business that serves its communities well without sacrificing its core identity. The key is finding monetization strategies that add value to the user experience rather than detract from it. The outcome is possible but might be too idealistic for a company whose shareholders believe that the share price will go to the moon.

Listen here:​​ Spotify​​ | ​​Apple Podcasts​​ | Overcast

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