Reddit Faces Challenges Dynamic Product Ads AI Spam
Reddit has firmly established itself as an ad-first business, and its latest move underscores this focus by introducing a new ad format aimed at selling products directly to its users. Today, Reddit announced the global public beta launch of Dynamic Product Ads. These ads leverage “shopping signals” from user discussions about products or brands, machine learning, and advertiser product catalogues to display relevant advertisements. An example provided in Reddit’s blog post showed ads, complete with product images and pricing, appearing in response to a user’s query, with user comments featured below the ad.
Dynamic Product Ads are designed to show users advertisements based on their previous interactions with the advertiser’s site and their engagement with content on Reddit or other advertiser sites. This new format does not necessarily mean users will encounter more ads, but it does highlight Reddit’s emphasis on ad sales, particularly as the company has struggled with profitability. Reddit’s EVP of Business Marketing and Growth, Jim Squires, emphasised the commercial nature of Reddit’s communities, stating that the platform is a place where people come to make shopping decisions, and the goal is to integrate brands into these interactions in a valuable way for users while driving business growth.
Reddit’s move towards a more ad-centric approach has been increasingly apparent over the past year. In June, Reddit began charging for API access, a change initially presented as a measure to prevent large language models from using its data for free training. However, it was also seen as a strategy to drive users to Reddit’s website and mobile app, where ads could be served. This change led to the shutdown of many valued third-party Reddit apps and sparked user protests. According to Reddit’s February SEC filing, advertising accounted for 98 percent of the company’s revenues in 2023 and 2022. CEO Steve Huffman noted that advertising is Reddit’s primary business and that the ad business is still in its early growth stages.
In September, Reddit further restricted users’ ability to opt out of personalised ads, and in June, it introduced a tool for advertisers that uses natural language processing to scan Reddit comments for keywords indicating potential interest in a brand. Today’s blog post hinted at future developments aimed at enhancing the ad experience on Reddit, including new shopping ad formats like collection ads and merchant platform integrations to support smaller merchants.
As Reddit continues to push its ad sales agenda, other companies are also trying to capitalise on Reddit’s user base. A report from 404 Media highlighted the activities of ReplyGuy, a platform that uses AI-generated responses from seemingly legitimate accounts to promote products on social media, including Reddit. ReplyGuy claims to employ high-quality accounts to write responses that appear to be unbiased but are actually paid advertisements. The platform is expanding to support other social networks such as LinkedIn, TikTok, and Hacker News. A video on ReplyGuy’s website demonstrates how customers can input their company’s name and website, after which the platform suggests keywords for the bot to target in subreddit and tweet responses. ReplyGuy advises customers to mention their brand name without including links to avoid being flagged as spam.
Reddit has long been a target for spam, and both volunteer moderators and automated tools work to combat it. The company uses various content and behavioural signals to detect spam, including vote manipulation patterns and untrusted URLs. Moderators also have access to tools like Automoderator to assist in identifying spam. While the impact of ReplyGuy on Reddit is not fully clear, the report noted that many of the accounts shown on ReplyGuy’s website had been banned before the article was published.
Despite these challenges, Reddit’s commitment to growing its ad business remains steadfast. The introduction of Free-Form Ads in March, which are designed to blend in with regular posts except for a “Promoted” label, is part of this effort. Although the proportion of content removed for spam by Reddit admins has reportedly decreased, the platform’s focus on ad sales suggests that users can expect to see more ads, whether purchased directly through Reddit or via third-party bots.
Reddit’s new Dynamic Product Ads are a significant addition to its shopping ecosystem. These ads are tailored to support users throughout their shopping journey, from discovery to consideration to purchase. Reddit’s platform naturally fosters commercial interactions, with a significant portion of conversations centred around purchase decisions. By combining these rich shopping signals with machine learning and advertiser product catalogues, Dynamic Product Ads aim to convert high user intent into action by connecting people with the products they seek at the precise moment they are looking for them.
The new ad format offers features like instant campaign creation, which allows ads to auto-populate in real-time with the latest images, pricing, and product information from an advertiser’s catalogue. It also introduces two new targeting options: Retargeting, which serves ads based on users’ previous engagements with the advertiser’s site, and Prospecting, which displays relevant products based on user interactions on Reddit or advertiser sites. These ads can appear in both feed and conversation placements and come in single image or carousel formats to reach users at various stages of their purchase journey.
Early tests of Dynamic Product Ads have shown promising results. For example, outdoor apparel company Cotopaxi, men’s clothing brand Chubbies, and beauty retailer Ulta Beauty reported strong performance with this ad format. Chubbies, in particular, saw a significant increase in Return on Ad Spend (ROAS) during the holiday season by utilising both prospecting and retargeting options. Ulta Beauty noted that Dynamic Product Ads allowed them to engage consumers where relevant discussions about their products were happening, leading to improved ROAS.
Reddit’s vision for its shopping ecosystem includes continued investment in both advertising and organic shopping solutions. The platform aims to streamline the purchase experience by providing faster access to relevant information that complements the quality product advice users already receive from Reddit communities. Future plans include introducing new shopping ad formats, such as collection ads, and integrating merchant platforms to support smaller businesses.
The evolving nature of consumer shopping behaviour and expectations has created a more fluid purchase lifecycle, making commerce-enabled moments in media increasingly prevalent. Reddit’s unique position as a platform where users connect, learn, discover, and share makes it an intriguing prospect for e-commerce advertising. The introduction of Dynamic Product Ads is a step towards empowering brands to reach high-intent audiences and drive confident, higher-value purchase decisions.
Dynamic Product Ads are now available in public beta to all Reddit advertisers globally, with support for multiple languages. Reddit’s commitment to enhancing its shopping ecosystem and driving business growth through ad sales is evident in its strategic focus on integrating brands into the platform’s rich commercial interactions. As Reddit continues to evolve its ad offerings, users can expect a more personalised and contextually relevant shopping experience.
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