Reddit COO on ad growth, licensing to AI firms & brand safety amid social media scrutiny

Though the company has yet to become profitable, it’s poured significant investment into building out key revenue streams in recent years, expanding its advertising business, and introducing premium subscription-based offerings. The company has also begun to license its data to partners like OpenAI; the two inked a deal last week that will allow the AI developer to use Reddit content to train its large language models.

Reddit’s chief operating officer Jen Wong heads up all of these efforts. Since joining the company in 2018 from Time Inc., where she served as COO and president of digital, Wong has been charged with building Reddit’s business. And amid an influx of emerging tech, growing scrutiny around social platforms from lawmakers, recent tensions between Reddit users and leadership and a digital ad landscape disrupted by data signal loss, Wong is more bullish than ever on the future of Reddit’s business.

In an in-depth conversation with The Drum, Wong explains why.

The Drum: Can you give us a sense of what the mood at Reddit has been like internally since the IPO?

Jen Wong: It is a really special moment for the company. It was also really validating, from the responses of the market and even the community, [some of whom] were participants in our directed share program, [which granted some users the ability to buy company stock at the IPO price]. I think people realize, like, ‘Wow, despite the twists and turns over the last 19 years, Reddit’s a good platform. It's got a lot of users who love it, and it's a good business.’ And that felt really good.

It is just a moment, though. When you’ve been around for 19 years, and you’re a very mission-driven company – you can see the next 19 years – you do treat it very sanguinely as a moment. The Monday after, you’re back at work. We’re not looking to the stock price – we’re building our platform, growing users, growing the business. I think we really have our head on straight. We have a very long-term view on everything.

TD: How are you feeling about the market more generally? And what does its tone suggest for Reddit’s business?

JW: The market in the US is feeling pretty optimistic, despite some uncertainty geopolitically. The market is … looking for growth, which is great. Globally, it’s a little bit more mixed. My sense is that the UK is still recovering a little bit more from high inflation, and they also have an election coming. The economy in Europe, I think, is pretty strong. It’s different in different parts of the world, but generally positive. I think the market continues to look for performance and efficiency, so there’s optimism, but it’s pretty focused on measurable outcomes – so leaning toward the mid- to bottom of the funnel. And that’s fine [for Reddit] – we cover all objectives.

The last couple of years honestly had a lot of volatility. We had some strikes in different sectors, and that seems to not be the case [this year]. M&A is going back to having a nice, robust release schedule. Each vertical seems to have more stability, which is nice to see.

[In light of] this focus on efficiency and performance, and the changes in cookie deprecation, and the signals landscape, I am hoping that people really embrace Meta’s Conversions API and server-to-server integrations. That’s hard for clients because it requires work on their end, but it really drives performance and resiliency. And I think that’s a really important movement. We’ll see much more engagement on that front between now and early 2025, when there will be changes in the signals landscape. I anticipate that that will happen.

TD: Give us an overview of how Reddit’s advertising business has evolved in its lifespan thus far.

JW: A lot of people think, ‘Oh, you ran around for 19 years, why are you at the life stage you’re at when it comes to the ad business?’ And, well, we kind of only started [that business] six years ago when I came to Reddit, and even then, it took a little bit of time to build the foundations. We didn’t have an auction till 2019, and we didn’t start getting into click-based objectives until shortly after that.

But we’ve always had a vision, from the beginning, that Reddit – because of its high intent, because of its organization and communities – would have some great raw materials [for marketers and advertisers]. Raw material number one was the high intent. Raw material number two was unduplicated reach. Raw material number three was the unduplicated interest graph, because when you’re anonymous and on Reddit, you spend time on the things you’re interested in – not the things that you want to display to friends and family [like other social platforms]. We’ve always known that we have those raw materials. As a result of that, we’ve always believed that Reddit would be a full-funnel solution, and that we could play everywhere from unduplicated reach at the top of the funnel to the bottom of the funnel … creating an experience that was converting. We’ve always believed that we could address all advertisers – we’re unlimited in the number of advertisers we could have on our platform because we cover every topic.

And because we’re organized in communities and words, we have the ability to do keyword targeting, which is very contextual and very fine-grained. So a smaller business, [for example], can find the exact customer that they want in a conversation, in context. That’s what we’ve been building toward. And we’re in the middle of that journey.

In our progression, we started at the top of the funnel, we moved to the middle funnel – where we deliver really efficient, high quality traffic to advertisers – and we’re investing in the lower part of the funnel this year. It’s early, but we just launched shopping [features], we’ve been working on the conversion objective, the app install objective, lead generation. In terms of bottom-of-funnel conversions, we’re applying a lot of machine learning work there, [especially in] post-click and laying down Meta’s Conversions API for signals collection to even improve the model from there. So you can see where we’re going in that journey. We’re still mid-flight as we work out in the marketing funnel.

And then, if you look at our channels, it’s the same thing. We started with top-300 advertisers, we moved into mid-market advertisers who are direct buyers and who buy at the middle or the bottom of the funnel. And we’ve also started serving small to medium-sized businesses, which has been a nice growth segment … we’re starting to get into that wider set of advertisers who I think can take advantage of the fine-grained targeting.

We’ve crystallized this vision to be the best at contextual, interest-based advertising, which is radically different from developing in-depth, demographic profiles on people [in the way that is required for user-level behavioral targeting models]. It’s taken some time for us to explain [this path], but it’s really resonating.

And the other thing we’re doing is [helping advertisers understand that] we’re not just the ‘social bucket’ – we are a biddable platform. If you look at Reddit’s traffic, a good chunk of it comes one click past search or via high-intent [routes] like search. We sit at this intersection of search, social and a couple of different buckets of addressable. [It was initially very challenging] explaining how we’re different from a platform perspective, explaining what ‘community’ means in our world, explaining how our app proposition works in contextual, interest- [based targeting] with anonymous users is in communities – it’s radically different. I think that is coming through, but we’re definitely mid-flight in building all of this.

I am really proud of the teams, because … our teams are half the size of near-term peers and incredibly productive in building out the ad stack.

TR: In your perspective, where is Reddit’s advertising business going from here? What’s the next phase?

JW: There’s a lot of headroom. We’re moving toward that full-funnel [vision], and we’re working on adding a lot more advertisers to the platform and continuing to diversify across geography, verticals, size. We’ll continue to expand in those areas.

It’s kind of an interesting situation … there haven’t really been a lot of new entrants in the consumer tech media and platform landscape. And given the volatility in some of the platforms over the last couple of years and some of the uncertainty hanging over certain players, marketers want partners who they can build a long-term relationship with – who have the scale, the growth, the product performance … where they can see stability three, four or five years out. I think we are one of those players, so I think we’re in a very good position. And that’s not been a given in our marketplace over the last couple of years.

TD: Tell us about the company’s burgeoning data licensing business.

JW: Reddit’s corpus of data is really unique. It's got 19 years of human conversation covering every topic on the planet, certainly in English. And every minute of every day, it regenerates with new, fresh, human ideas. That’s incredibly valuable.

And if you think about the future, where there is going to be more summarized content, more synthetic content, or AI-generated content, real, human ideas and ways of speaking will increase in value. Somebody is going to have to review the new vacuum cleaner, you know? They’re going to have to share their human experience and help someone stop drinking or help someone grow their garden. In the end, there’s a lot of things in the human experience that you can’t replace. So I think our value actually goes up. And you see that in what’s happening in the search landscape. People are like, ‘There's just so much I'm seeing [and it’s overwhelming], so I’ll put ‘Reddit’ in the search.’ That’s partly because our corpus [of content and data] is becoming more and more differentiated.

That’s sort of the backdrop, and then you have the emergence of AI and these large language models. They want data to train on – both for chat capabilities as well as for freshness [and ensuring outputs are relevant]. And we’re very important to that.

We believe in the technology, and we want to work with partners to the extent that it makes sense. But there are things that are really important to us in doing that. User privacy is an important principle in our company – being able to respect user deletions and user edits of their data. What that means is that we will not do partnerships with everybody – we will be very thoughtful about who we do partnerships with, and make sure all of our principles are aligned and we get to commercial terms. All those things have to fall into place.

In the end, Reddit’s data, within our walls, is the source of how we think about building new products. It’s the source of how we match marketers to customers. We have a lot of value in our own four walls here. So we’ll license as it makes sense, but we’re very thoughtful about it.

TD: Social platforms have been the focus of increasing scrutiny among online safety advocates as well as lawmakers across the globe. Recent congressional hearings in the US have really shined a spotlight on concerns around data privacy, national security and user mental health. How are you approaching the challenge of ensuring both advertisers and users on Reddit are safe?

JW: We take safety incredibly seriously here.

An advantage of having been around for 19 years is that we've been through many election cycles and geopolitical cycles. And I think we do a good job, especially if you look at the last, let’s say, four years. Our platform has done a good job with its core content moderation practice. It’s very different [from other platforms] – we have human moderators, we have subreddit rules, we have global rules, everybody’s a moderator in that they can upvote and downvote content.

It’s not a virality-driven, follower model. Every post has to earn its visibility through thousands of people upvoting it. If something’s controversial, it will get upvoted and downvoted and maybe not actually go viral and get the visibility. It’s a very different system that I think is working for us. That’s proven itself out in the fact that we were not a part of [the January] congressional hearing [where execs of Meta, Snap, Discord, X and TikTok were put on blast]. The platform has been relatively quiet.

Over the last six years [of running Reddit’s advertising business], it took time to educate folks on brand safety. And now, there’s a conversation about it, but it’s not a barrier. [Consider how] people have brand safety concerns about feeds and their content. We don’t really have that [issue because our platform doesn’t have traditional feeds]. And people really appreciate our content moderation.

TD: Last year, Reddit users clashed with leadership over changes to the platform’s data API pricing. It wasn’t the first time that users and moderators have scuffled with the company’s leadership. How are you thinking about maintaining healthy relationships with Reddit’s highly engaged user base?

JW: That was a big moment. I think protest is okay on Reddit. It wasn’t the first [time], and it won't be the last. We obviously don’t want that all the time, but I do think we’re always stronger and better for it.

We were responsive [last year] to what was fair feedback about accessibility. We responded very quickly to [complaints about] lack of parity and moderator tools. And within a couple of months, we hit all the parity marks [that had been advocated for]. We actually did a sentiment review and we got very positive feedback.

Our moderators are generally in a very good place. We do a lot of mod meetups. Almost every year, we go meet with mods, hear how they’re feeling, and we get them together. [The one we just did in New York] was really positive. That’s how we know that we’re in a good place. We’ve done a good amount of investment for the mods, and we’ll continue to do so.

And hopefully, we don’t have to have a protest in order for us to continue to make progress together. But it happens in the lifecycle of Reddit. We’ve all moved on from it – it didn’t affect the business and didn’t affect our user growth, so that’s the telltale sign. The platform is stronger than ever.

TD: What’s your long-term hope for the future of Reddit’s business?

JW: We want 10- to 20-times the number of advertisers. We’re almost unlimited in the advertisers who can be on our platform. We want businesses to find a home on Reddit, maybe organically through Reddit Pro, which we launched [in March], maybe as paid marketers, maybe garnering insights from our platform to make better business decisions.

We have a very big vision for Reddit being a great partner for businesses. That was not necessarily true at the beginning – we were for users and individual people. Now, we [want] to be a great partner to a large scale of businesses around the world. That’s where we want to go.

The ad platform is 100% a part of that proposition, but it’s bigger than that, too – it’s having these businesses find a home on the platform, being able to garner insights from our communities to make their businesses better, finding their customers, and growing their businesses.

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