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Can Reddit monetise and survive?

The self-proclaimed front page of the Internet could be about to drastically change as the small team behind Reddit investigates ways in which it can earn some crucial advertising dollars whilst at the same time not becoming the next Myspace or Digg.

Related: Make your own breaking news with Reddit Live

A discussion in the New York Times (opens in new tab) focuses on how the site could potentially grow even with its unique user model that holds the key to whether advertising money makes or breaks the service.

“One of the things you have to be careful of when you have a site that’s 100 percent community-driven is how best to support that community and not make them feel like you’ve sold out,” said Kevin Rose, general partner at the venture capital firm Google Ventures. “You just don’t want that community to blow up on you.”

Rose knows all too well the effect that changing the status quo can have. As founder of Digg, another link sharing site similar to Reddit, he saw millions of visitors a day flock to the site until it eventually succumbed to the Internet scrapheap after a radical change in advertising strategy and appearance.

From Reddit’s side of the net, founder and board member Alexis Ohanian argues that if it is already “thinking this hard about user experience, why can’t we try a little harder about the monetisation?”

So far the company already offers a Reddit Gold service that allows users to pay for the site and a Gift Exchange programme but the next level should let it go further and finally turn a profit.

“We’re not monetising to the full extent that we could,” said Ellen Pao, head of business strategy at Reddit. “Our business comes from wanting to be able to continue to serve as a place where people build awesome communities.”

Advertisers could find the service hard to crack thanks to a breed of users, redditors, that is a different beast compared to those that are found on social networking sites like Facebook, Twitter and Pinterest.

Currently Reddit doesn’t run for a profit and charges around $100,000 [£58,800] per campaign for a large advertiser and $20,000 [£11,780] for a good size single ad sale, according to one person familiar with Reddit’s finances.

Reddit thinks brands will be attracted to subreddits and having a native ad at the top of one of these would give it a chance to generate conversation to drive a high level of engagement.

Analysts, meanwhile, are sceptical that brands will be attracted to Reddit users due to the anonymous façade that large swathes of its user base like to maintain.

“People on Reddit want to be anonymous, and at some point these brands want to have a real relationship with their customers,” said Brian Blau, an Internet analyst with Gartner Research. “Can Reddit deliver that over time?”

Related: Default subreddits protest at influx of new Reddit users

Reddit will live and die by its users so being sensitive to its customer base will be key to its future in a monetised climate.

Jamie Hinks
Jamie Hinks

Jamie is a freelance writer with over eight years experience writing for online audiences about technology and other topics. In his time writing for ITProPortal he wrote daily news stories covering the IT industry and the worldwide technology market, as well as features that covered every part of the IT market, from the latest start ups to multinational companies and everything encompassed by the IT sector. He has also written tech content for our sister publication, TechRadar Pro. Jamie has since moved into sports betting content and is Content Manager at Betbull.