THE CRUNCH
Reddit has started testing ads within its search results pages, placing sponsored results alongside what people search for on the platform. Ads will appear "based on a range of factors, including contextual relevance to a user's search query", according to Reddit's announcement. Searching for "espresso station" might surface ads for espresso machines, coffee or mugs, while a "home office setup" search could show monitors, desks and office chairs.
It is an initial pilot with a select group of eligible advertisers, and Reddit says it will watch how users respond so it can refine the experience over time. The company already runs ads across its feeds in several formats, including images, videos, sponsored posts and AMAs, as well as within threads, so search is a new surface rather than a first foray into advertising.
The timing is telling. The test was announced days after Reddit warned investors about declining search traffic and issued a weaker-than-expected revenue forecast of $1 billion to $1.03 billion for the fourth quarter, below the expected $1.05 billion. The shortfall was tied to Google's AI-powered search experience, which answers queries directly and sends fewer clicks to publishers' sites.
Reddit's audience figures add to the pressure. Global daily active users were flat quarter-over-quarter at 130.3 million in Q3, while US daily active users fell from 53.2 million to 50.7 million and were down 2% year-over-year. The company said that if the trend continues, daily active users could decline to a low double-digit percentage by the fourth quarter. With fewer users arriving, earning more from existing ones becomes the obvious lever, which is where search ads fit in.
The ads may also become more valuable once Reddit completes its planned shift to a logged-in-only experience, announced during earnings and starting gradually in markets outside the US. Logged-in users provide more signals about their interests and behaviour, allowing better-targeted and more profitable ads, while also protecting Reddit from unauthorised AI scraping.