Still in the Red, Reddit to Donate One-Tenth of Ad Revenue to Charity
Reddit has always had a weird relationship with advertising. It’s almost as if the social message board and link aggregation site has gone out of its way not to make money for most of its existence.
In that vein, the site announced that it plans to donate one-tenth of its 2014 advertising revenue to charity — a move that’s quite out of the norm for privately held Internet companies based in Silicon Valley.
“Whether it’s a large ad campaign or a $5 sponsored headline on reddit, we intend for all ad revenue this year to benefit not only reddit as a platform but also to support the goals and causes of the entire community,” CEO Yishan Wong said in a company blog post.
“We want to show that advertising doesn’t just support the reddit platform, it also directly supports the causes and goals of reddit as a whole,” he said.
Since its inception, Reddit’s leaders have fought to keep the platform as “pure” as possible, which meant not slapping banner ads on the front page of the site willy-nilly. Perhaps that could have led to a massive influx of revenue early on, considering Reddit is one of the most trafficked sites on the Internet. On the other hand, Reddit’s continued insistence on keeping advertising unobtrusive could be one of the biggest reasons it has such a wide, rabid audience.
Donating 10 percent of this year’s ad revenue — while exceedingly generous — is a bit of a head-scratcher, considering last time Wong and co-founder Alexis Ohanian spoke about revenue, Reddit was still operating in the red. Literally “decimating” the annual ad revenue probably won’t help efforts at becoming profitable.
That said, Reddit has other revenue streams, like its Gold program — essentially a subscription to perks on the site, which members can also give as gifts to each other at a small cost. It has also experimented with selling some in-house merchandise.
I’d guess, too, that this donation idea could spur some redditors to turn off their adblock programs. If it actually works, that means a bump in Reddit’s overall revenue, not to mention an extra boost to charitable donations. (We’ll see how the whole experiment works out at the end of the year.)
“It’s less about a numbers game as it is trying to align things even more between ads and the will of the community, because we want to have the right business model,” Wong said in response to a redditor’s comments on the announcement. “We’re getting closer to closing the gap.”
At the end of the year, the site leaders will solicit the community for charity nominations and plan to distribute the funds evenly among the top 10 nominees.