Reddit is expected to generate $1.8 billion (+49.6%) in advertising revenue this year following its IPO launch last year, according to WARC Media’s Platform Insights.
The platform, which aims to be an “alternative to social media”, brings together like-minded people through text-oriented engagement style through highly targeted search behaviour that enables brands to be discovered organically. WARC noted that AI ad targeting and content licensing agreements are further advancing its upward trajectory.
Reddit’s mid- and lower funnel revenue accounts for 60% of its total revenue with top of the funnel brand advertising revenue growing the fastest rate in over three years, according to its Q4 2024 earnings call.
Celeste Huang, Media Insights Analyst, WARC Media, and author of the report, said: “Reddit’s ad business is currently relatively small, but its impressive ad spend growth, its increasing reach, which now surpasses X, and its investment in AI is catching the attention of a wider pool of advertisers.”
Alex Brownsell, Head of Content, WARC Media, added: “This latest Platform Insights report provides evidence-based insights on the challenges and opportunities Reddit has to offer advertisers, and explores its latest trends across investment, consumption and performance.”
Celeste Huang: ‘Reddit’s ad business is currently relatively small, but its impressive ad spend growth, its increasing reach, which now surpasses X, and its investment in AI is catching the attention of a wider pool of advertisers.’
WARC predicts Reddit’s ad revenue is expected to grow to $2.5 billion by 2026 (+39.0%).
To attract advertiser dollars, the company has strategically leveraged AI across its business, from AI-aided content moderation and translation, to AI content licensing deals. Its AI search feature, Reddit Answers, has quickly gained traction with one million weekly users in Q1 2025.
In terms of daily active users (DAU), WARC said Reddit boasts 606 million DAU, surpassing X’s reach (586 million) and approaching Snapchat (709 million), according to Datareportal analysis.
Reddit also wants to be the alternative to AI search answers, through its community-driven, conversational engagement model.
The platform was one of Google’s top 20 search terms in 2024, and sixth in the last 90 days, according to CEO Steven Huffman. Users are often found to arrive via Google with a question in the hope of discovering an answer on Reddit.
Alex Brownsell: ‘This latest Platform Insights report provides evidence-based insights on the challenges and opportunities Reddit has to offer advertisers, and explores its latest trends across investment, consumption and performance.’
According to Reddit, its top markets by weekly views are the US, UK, Canada, Germany and Australia. For brands trying to reach new audiences, 30% of Redditors are not on Facebook, while 63% are not on Pinterest. However, GWI data suggests that as many as 81.8% of global Reddit users actively use YouTube.
Reddit reported that 43% of recommendation conversations on its platform involve users seeking new product options or alternatives.
Reddit advertisers can benefit from highly organic and trusting engagement with the platform reporting 25% of Reddit posts are recommendation-related, its trusted users come to find new products and inform purchase decisions.
The platform’s data reported 42% of users rank the ability to ask questions within trusted communities as top three priorities for product research while 76% of believe posts on the platform are more “honest and truthful” than other platforms.
However, nearly one in four recommendation posts elicit a “redirection”, meaning the original poster would consider another brand.
WARC noted that as consumers seek reciprocal relationships with brands on the platform, advertisers can leverage conversation-focused formats like Ask Me Anything (AMA) ads and Reddit Pro Trends to build organic strategies that enhance customer retention and satisfaction.
Reddit’s AI investments are enhancing targeting and lower-funnel capabilities, with advertisers using both Dynamic Product Ads and standard conversion campaigns to achieve 2x higher return on ad spend (ROAS) in Q1 2025.
Recent MMM meta-analysis found advertising on Reddit delivers gains across full media plans. Reddit was found to be among the top two paid social platforms in efficiency, with 11% of impact from boosting other channels.
