Businessmodel of Reddit
Customer Segments
Reddit is targeted at internet users who are interested in curating and sharing content on a community-led platform, and at advertisers that wish to broaden their audience.
Recent research of the platform’s user demographics show that more than half of the site’s users are from the United States, with average users typically being aged between 18 and 29 years old.
Media coverage of Reddit suggests that its users tend to be more private than on other social platforms and are often more technically savvy. Despite this, the platform is targeted at a wide range of users, offering content relating to a full spectrum of topics.
Value Propositions
Reddit’s key value propositions are that it provides users access to a democratic, community-driven, content-rich space free of charge, and provides advertisers access to a large audience of regular users.
The Reddit platform presents itself as a social news platform where ideas and interests can be discussed in greater depth, and users with niche interests can interact with like-minds. The ability of users to vote and actively affect the content of the site is also a major draw.
That the site attracts more than 230 million unique users each month from more than 200 countries is also an attractive prospect to brands and marketing agencies.
Channels
Reddit is accessible either through its desktop or mobile website. While the platform does not have an official Apple iOS or Google Play app, site content can be accessed via a range of third party mobile applications.
Customer Relationships
Reddit is primarily a self-service and community-led platform. Once a user has registered, either with a basic free account or a premium Gold Account, they are able to begin using the platform’s tools autonomously. Content on the site is created, curated and managed by members of the community itself. Experienced users also serve as moderators of discussion boards on specific subjects, known as subreddits, to ensure standards of etiquette.
For advertisers the platform also has a self-service advertising tool on its website, through which brands and individuals wishing to place advertisements in the platform can do so without direct contact with the Company itself. Self-service advertising offerings begin at $5; any ad campaigns with a budget of more than $30,000 however must be discussed with the Reddit team directly.
Reddit is able to interact with its users via its own bulletin boards as well as through direct messaging. The Company also operates several social media accounts, including with leading platforms Twitter and Facebook.
Key Activities
Reddit develops and maintains an online, community-driven platform for the sharing of content. It also provides opportunities for brands and advertising agencies to place sponsored posts and bid on advertising space.
Key Partners
Reddit’s key partners are advertising and media agencies, and other tech companies. Reddit works with media and advertising partners that use the platform to raise the online profiles of their clients through media marketing schemes.
Reddit has partnerships in place with firms such as Prediq Media, and has hosted successful advertising campaigns from companies including Newsweek, Atari and Maker’s Mark. In an additional marketing and branding partnership, Reddit recently teamed up with Google Cloud Platform to publish a series of collaborative branded videos, comprising interviews with entrepreneurs.
In 2014 Reddit partnered with several other online community websites to create the Digital Ecologies Research Partnership, which aims to “promote open, publicly accessible, and ethical academic inquiry into the vibrant social dynamics of the web”. Reddit also has several fundraising partnerships through Reddit Donate and Reddit.Crowdtilt.com.
Until 2016 Reddit operated a Reddit Gold Partnership scheme, through which partner brands offered discounts and deals to premium Reddit users. This program has however been discontinued as of March 2016.
Key Resources
Reddit’s key resources are its IT infrastructure and its personnel. The Company’s community of users, who account for the creation and moderation of content on the site, must also be considered a key resource.
Cost Structure
Reddit’s major costs comprise platform maintenance, personnel salaries, and the operation of a marketing and sales team. It also accrues costs in the form of office and server rental.
Revenue Streams
Reddit has two principal streams of revenue: advertising and its Reddit Gold scheme. Additionally, Reddit has begun to generate some revenue through its Reddit Gifts online marketplace.
In 2015 the Company generated more than $8 million in advertising revenue. The most common advertisements found on the site are sponsored headlines which appear at the top of pages in a style similar to user-submitted posts. In addition to its self-service advertising options, Reddit also operates the Reddit Ads platform, an auction-based system for the sale of advertising space where there is a minimum bid but no capped bid amount.
Reddit also offers a premium subscription service named Reddit Gold which grants users access to additional features and content, including the ability to remove ads, access to new design themes, and access to a members-only subreddit. The Gold Programme costs $3.99 per month or $29.99 per year.