How Reddit Makes Money: What you Need to Know

Reddit Incorporated is a social networking site where people can join online communities, share ideas, photos, and videos, post the latest trends and breaking news, and vote on what others have posted. The website is known for its discussion forums, such as the famous "Ask Me Anything" format. Reddit makes money by selling advertising space and letting users join a paid plan that lets them turn off ads and enjoy other perks. Reddit also lets advertisers use managed ad campaigns and auction-based ads. Let us see how Reddit makes money.

Reddit's Business

Reddit is a social site where people can join groups and share news articles, pictures, videos, and links. In these societies, users' status is determined by the content they share and how other users rate it. People also use Reddit's online forums to talk about politics, entertainment, etc. Facebook Inc. (FB), TWTR (Twitter Inc.), and Alphabet Inc., which owns Google, are all competitors of Reddit (GOOGL). Some competitors that are not as well-known are Quora 9GAG, Digg, Tumblr, and Gizmodo Media Group.

Money-Raising and the Finances

Reddit was worth $6 billion in its last round of funding, which took place in February 2021. The company raised another $250 million in its most recent round, led by Vy Capital. Before its last funding round, which brought in $300 million in February 2019, Reddit was worth $3 billion. Tacit Capital, Fidelity, Sequoia Capital, TCEHY (Tencent Holding Ltd.), and even Snoop Dogg all put money into the round. So far, Reddit has raised about $800 million.

The company says that more than 52 million people use its website every day, and 50 billion people look at it on average every month. In 2019, ads brought in more than $99.9 million for Reddit. COO (Chief Operating Officer) Jen Wong told the Wall Street Journal that this number should grow by 70% in 2020. CNBC thought that Reddit's ARPU (average revenue per user) was about $0.30 after its funding round in February 2019. At the time, Twitter's ARPU (average revenue per user) was $9.5, and Facebook's was $7.4.

History and Taking Charge

In 2005, Alexis Ohanian and Steve Huffman started the business. It is based in the California city of San Francisco. They lived together in college, and when they graduated from the University of Virginia, they started the business right away. Condé Nast Publications bought Reddit in 2006, and in 2011 it became its own company. Huffman is the CEO of Reddit and serves on the company's board. Ohanian asked that a Black person took his place on the board when he left in June 2020. The CEO of Y Combinator, Michael Seibel, was then chosen to take Ohanian's place.

How Reddit Reports on Diversity and Being Open to Everyone

As part of our efforts to make people more aware of how important diversity is in business, we show investors how open Reddit is and how committed it is to diversity, inclusion, and social responsibility. We looked at the information that Reddit gives out. It shows that Reddit doesn't share any information about how diverse its board of directors, general management, C-suite, and employees are. It also shows that Reddit doesn't show how different it is based on gender, ability, race, being a veteran, or being LGBTQ+.

Here Are Some of the Ways Reddit Makes Money

Reddit Premium

In order to access additional services that are not available to free members of Reddit, you must pay a monthly membership fee. As a Premium member, you don't have to see ads and can use the lounge as much as you want. You also get 700 free coins every month. Every month, more than 430 million people use Reddit. It's not clear how many have paid subscriptions and free accounts.

Reddit Dollars

Reddit Coins are digital items Reddit users can buy in packs and give to other Reddit users in exchange for posts, comments, and good content. Reddit Coin users can also use r/lounge, which is another benefit. Which is a subedit that only Premium members can join.

Advertising

As part of their business plan, Reddit also sells ads, which they usually call "Reddit Ads." The ads on Reddit work like Etsy and Amazon, which use an auction system. The ads go to the people who bid the most money for them. Advertisers may choose their daily budget and the amount they are ready to pay for each bid. Based on the parameters you provide, Reddit will estimate the number of people who will view and click on your ad.