How does Reddit make money? Reddit’s business strategy

About Reddit 

Known as the ‘Front page of the Internet’, Reddit is a well-known social platform founded by Steve Huffman and Alexis Ohanian in 2005. It was created for users to interact with other people around the globe and gained fame in 2008. The site is considered to be an online content rating platform, a social discussion forum, and an impeccable fusion of news. But a lot of you might be thinking, what keeps them afloat? How does reddit make money? 

Reddit allows its members to post content such as images, videos, text posts and links on the site. The users then can comment on the posts, and share their ideas and opinions with other users, about the content. 

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How does Reddit work and how does Reddit make money?

Reddit has its individual discussion spaces or subgroups known as ‘subreddits’, basically divided based on the category of the content. The members of Reddit post the content on the site and it is voted as an upvote or downvote, by the other members. It is quite interesting and user appealing.  

Business Model of Reddit 

  • Customer Sections: Professional users such as business, analyst and investors. Individual users such as researchers and young adults. 
  • Customer Relationship: Feedbacks, recommendations 
  • Channels: Web and Mobile App, Browser Plugin 
  • Value proposition: Opinions, views on various content 
  • Key resources: IT infrastructure, Intellectual Property 
  • Key partners: Content generators like News sites and personal blog sites 

How does Reddit make money?

Reddit is one of the most popular sites on the internet, with millions of recent people registering themselves on the site every month. The company’s value is near about $1.8 billion with over $100 million income per year.  

The business strategy of Reddit is quite modest. There are a variety of sources of income by which Reddit makes money such as advertisements, premium features, and company products.  

So, let’s have a closer look at how does Reddit make money: 

Advertisements

Reddit is a great platform with millions of users that serves the people constructive advertisement opportunities. By doing so, the company makes a huge profit and the advertisements act as an advantageous source of income. 

Advertisement posting is divided into two categories: Managed ad posting and Self-serve ad posting. The price for passing an advertisement on the site page starts from $5 and can reach up to $30,000 depending on the threshold value (number of views on the page). The company offers an auction system for the advertisements, paying one cent more than the next highest bidding.  

The company also has Google AdSense advertisements on its sidebar which serves as another source of advertising income. 

This is how Reddit makes money with the use of advertisements and is seeking more advertisers in the future for its ad space. 

  • Premium Membership or Reddit Gold: 

Like other social platforms, Reddit also has its premium feature known as Reddit Gold which yields a great profit for the company. The company has some premium features like turning off ads, manage and filter comments. The features can be used by the members after paying and subscribing for Reddit Gold. 

  • Reddit Products:  

Reddit offers branded products for the users to purchase such as T-shirts, stickers, iPhones, etc. This strategy acts as another prestigious way of howReddit makes money. 

  • Reddit Gifts: 

The company proposes the feature of exchanging gifts for the users. Reddit Gifts is a freemium feature, meaning the exchanging and registering for the Reddit gift feature is free but there is also an optional premium gift membership. The membership includes benefits to the users which they can avail by payment. 

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