Dusseldorf Reddit boss Steve Huffman announced the official start of his network in Germany in Berlin. For the first time, Reddit is officially expanding beyond the English-speaking area. The aim is to support the existing local user community and to establish contacts with local advertisers.
“We already have enough users in Germany to see that Reddit works here,” Huffman told Handelsblatt. “The question is: Can we also grow faster here?” For the CEO, it is clear: If it works in Germany, it could work elsewhere – and that would be important evidence before the planned IPO.
Reddit is a social network that calls itself the “home page of the Internet”. The users, called Redditors, can open forums on specific topics and share and discuss texts, links, photos and videos in them. The spectrum ranges from news and computer games to stock market tips.
Well known is the “Wallstreetbets” forum, in which small investors exchange information about shares – and sometimes agree to concerted campaigns. So they drove up the price of the computer game retailer Gamestop and caused massive losses in several hedge funds. The case shows what reach simple users can achieve via Reddit.
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The user community has the reputation of being against the establishment – and in keeping with this, the boss positions his platform as “anti-Facebook”, which calls into question many of the principles of the billion-dollar network.
He is said to have started programming at the age of eight. In 2005, Huffman founded the social media platform Reddit together with Alexis Ohanian and Aaron Swartz.
The most important: Advertisements are displayed according to topic and not based on personal data. Instead of algorithms, users primarily decide on the positioning of content by voting. Instead of artificial intelligence and freelancers like on Facebook, volunteers control and moderate the discussions on Reddit. And in addition to free functions, Reddit also offers a paid premium version, which Facebook boss Mark Zuckerberg strictly rejects.
However, Reddit’s growth isn’t as expansive as Facebook’s either. According to the company, 1.9 billion users access the central platform alone every day. Reddit states 50 million daily users. And while Facebook made more than $ 28 billion in advertising in the quarter, Reddit recently proudly announced that it had cracked the $ 100 million mark for the first time.
A lot of money is available for expansion
“We’re not growing exponentially like other large platforms through a network effect, but rather organically – the way a city grows,” says Huffman. It is crucial that users in a country set topics, generate content and trigger a debate. This should mean some challenges for the expansion strategy. Huffman himself says that this type of growth “we cannot force” and does not give any concrete goals. The manager is currently in Germany to meet community representatives.
Attracting advertisers is just as important for the business model. Because Reddit has so far made its money mainly with ads, the premium offer only plays a minor role. After a round of financing in August, 700 million dollars (a good 600 million euros) are available, which can also be used to set up international sales channels. The company has since been valued at more than ten billion dollars.
For Reddit, Germany has so far been the market with the most users outside of the English-speaking world. The network should now become more attractive for them.
Germany was deliberately chosen as the first expansion destination in the non-English-speaking area, says Huffman. So far, almost half of the users come from the USA, while the UK, Canada and Australia are also important markets. In addition, Reddit currently has the largest community in Germany. There is also a “healthy advertising market”. Under good conditions, management can learn here how the expansion in the rest of the world can succeed – an important step for the stock exchange candidate.
“Den of sin” as an advertising environment?
However, one hurdle in addressing advertisers could be that Reddit’s reputation as a “den of iniquity” of the Internet precedes it. In sub-forums (“subreddits”) about computer games, sometimes misogynistic comments and racist remarks are circulating. And “The Donald”, a group of militant Donald Trump fans, made opponents of the politician contemptuous and spread conspiracy theories. The company is now doing more about it. The forum of unofficial Trump supporters also closed it.
The fact that the members moderate themselves also means that they sometimes tolerate more than artificial intelligence. Managers worried about their branding environment might put off such stories.
The moderation of content works better on Reddit than on other online networks, Huffman argues. Whether a post is hurtful or harmful can only be decided in context and with appropriate language skills – users and moderators can do that better than algorithms. The company itself focuses on fundamental decisions. In this way it is possible to manage international growth “responsibly”.
Expert: Contextual advertising is becoming more relevant after the cookie era
The management also emphasizes that advertisers can control exactly in which environment they present themselves. On the one hand, by specifying certain topics, on the other hand, by specifying the security level. “Brands are given a lot of control,” says Huffman.
According to advertising expert Vincent Hartig from the Thjnk agency, Reddit is an interesting brand environment. The following tends to apply: the larger the channels, the better the moderation and the higher the “brand safety”.
Companies should rather not advertise in the general area, but rather rely on topic-specific advertisements in the interest channels, advises the expert. As an example, he cites forums such as “r / FoodPorn” and “r / personalfinance”, which could be attractive for food retailers and fintechs, for example. With the end of the era of third-party cookies, this form of contextual targeting will become more relevant again. New regulation makes personalized targeting more difficult.
It is important at Reddit that “advertising does not feel like advertising through the right creative approach”. Because: “Reddit has engagement rates that other platforms can only dream of.” In this high level of interactivity, clumsy advertising is perceived as annoying. The strategy consultancy Accenture, for example, fits in very well with recruiting ads in developer forums – and cooker box provider Hellofresh in the food sector.
More: Reddit Traders’ New Target: Trump’s Spac divides Wall Street.