Reddit pulls out of open web programmatic ads, builds walled garden
Signalling the shape of internet advertising to come, Reddit, one of world's biggest websites, has withdrawn from the open web real-time bidding market. All ads must now be sold directly through its own platform. The walled gardens are coming.
What you need to know:
- Reddit has pulled out of the global open web programmatic market.
- According to the sites ads.txt page, “programmatic ads are no longer allowed on Reddit”. Instead, advertisers must sign up to Reddit’s own ads platform or its managed ads service.
- In building a walled garden, Reddit's move offers a glimpse of the post-cookie ad landscape.
- Reddit said: "We are proud of the strength of our native Ads business and the growth this change represents."
Reddit's exchange accounts still exist, but they're not running any auctions... Reddit's a walled garden now.
Reddit has exited the open web programmatic market, offering advertisers another glimpse of the future: a post-cookie patchwork of walled gardens. Brands and agencies can now only buy directly only through its own ad platform.
Reddit is attempting to scale up its ad business. The site is one of the world's most visited, yet has so far failed to match revenues to its massive loyal user base. Last month it set out plans to establish a sales operation in Australia, following expansion into Canada in March and the UK last September.
Now Reddit states advertisers can no longer buy placements on its site via open web ad exchanges.
Most publishers have an “ads.txt” page that lists ad tech companies authorised to sell their ad products or services. The initiative was introduced in 2017 by the IAB Tech Lab to help buyers avoid illegitimate sellers arbitraging inventory.
Per Reddit’s ads.text page: “Programmatic ads are no longer allowed on Reddit. Advertise on Reddit via signing up on ads.reddit.com or via Reddit's ads managed services on www.redditinc.com/advertising.”
According to web archive The Wayback Machine (see below), the page was updated in May 2021 but previously listed Google, OpenX, Pubmatic, IndexExchange and others as either direct or resellers of its inventory.
Reddit is consistently named one of the internet’s most popular websites, and said it had 52 million daily active users at the end of 2020 – up 44 per cent from the end of 2019.
A spokesperson for Reddit told Mi-3 the platform removed the last remaining programmatic ads on April 30, 2021.
"As we continue to scale our business, we remain committed to meeting the needs of our growing advertiser base... and moving forward, all ads on Reddit will be native ads sold through our direct Sales channels or on our Ads Platform. We are proud of the strength of our native Ads business and the growth this change represents."
Chris Kane, Founder and President of New York-based Jounce Media, suggested Reddit stopped selling ads on the open web in May, and its exchanges "have been dark" for at least a month.
"Reddit's exchange accounts still exist, but they're not running any auctions," he stated. "Reddit's a walled garden now."
Some supply-side players, including Xandr, Pubmatic and OpenX, still list Reddit in their "sellers.json" file, which is their equivalent of the "ads.txt" notice.
It's a good move. Reddit has the human audience, can sell directly to large advertisers and by doing away with programmatic ads, they eliminate problems like 'malvertising' that compromises their users.
Third-party cookies are currently due to be retired from Google’s Chrome browser before the end of 2023, with major implications for targeting and advertising. As a result of the uncertainty, the open web ad ecosystem is growing increasingly fragmented and many larger publishers are attempting to negate the whims of internet and app-based advertising monopolies.
Reddit, the self-proclaimed ‘front page of the internet’, appears to be shifting its ad model towards that of Facebook, TikTok and other social platforms. It is also now asking users to sign in, or download its app, testing the waters by blocking access to content for those that do neither.
Meanwhile, its beefed-up ad operation will likely attempt to woo bigger brand advertisers than some of the smaller fry it presently tends to attract.
In September last year, Reddit launched three types of ad inventory: Expanded, Standard and Limited. Expanded means ads are placed next to the broadest range of content. Standard uses Reddit's recommended settings to provide reach and brand protection. Limited uses Oracle Data Cloud's so-called contextual intelligence, touting stricter brand safety measures.
Reddit's ads.txt page now reads much like that of Facebook, Instagram and TikTok, which look like this:
While adtech firms will likely play down Reddit's open exchange exit, others suggest it represents advertising's future – and should lead to higher yields while protecting users from scams.
"I think it's a good move," said New York-based ad fraud and analytics consultant, Dr Augustine Fou. "They have the human audience, they can sell directly to large advertisers and by doing away with programmatic ads, they eliminate problems like 'malvertising' – ads laced with malicious code that compromise their users."
Fou thinks all premium publishers will ultimately have to follow the same path, i.e. "pull out of [open exchange] programmatic advertising".
He told Mi3: "If an advertiser wants to reach human audiences, they will need to buy direct from a good publisher – and pay a premium."
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