Five ways to save Condé Nast's Reddit

Last week Reddit announced that it was asking readers for donations to help support the development needs of its service. This move seems to copy Paste magazine's reader-driven fund-raising effort, hoping that loyal users will donate far more than they could get trying to charge for additional functionality. While user donations might get Reddit the additional resources required to keep the service operating within user expectations, it's not a long-term path to viability. Here are five overlooked revenue opportunities that Reddit could leverage to develop a high-margin business.

Short-term revenue opportunities

In October of 2009, Reddit launched its self-service advertising platform, hoping to reap revenues from sponsored links. While self-service advertising has done wonders for Google AdWords, building a loyal following of self-service advertisers is not trivial. You'd best have some marketing and sales support to go after high volume advertisers to get your CPMs and/or CPCs up. As you can see from the image on the right, Reddit's CPCs have been incredibly low.

1. Stop hiding audience data

Now that Reddit has a self-service advertising offering, how about creating a media kit with some audience information? In fact, how about opening up Reddit's audience profile on Quantcast (http://quantcast.com/reddit.com) so that advertisers can know a little bit about the folks they are targeting? [More on audience data]

2. Use ad networks for remnant space

Reddit should leverage ad networks to serve ads to those users who are not logged in. Save the premium inventory for premium advertisers, but, at 280 million page views, even the unregistered traffic should be enough to generate significant revenues. I can't tell you how many house ads I've encountered using the site while researching this blog post.

3. Coupons / Deals

Instead of completely relying on advertisers to find and use your self-service solution, Reddit should simply identify existing marketing opportunities that match audience needs. Affiliate marketing companies like Commission Junction, Azoogle, Tattoo Media, and (tons of others http://mthink.com/bluebook/top20) offer CPA and CPC payouts on affiliate and digital coupon campaigns that would match up nicely with Reddit's audience. Twitter has recently launched @earlybird, a service that helps connects its users to deals and discounts from paid sponsors. The service blends genuine user interest with revenue generating power and seems to be worth copying. [More on couponing]

Medium-term revenue opportunities

4. Sponsored Reddits

Content marketing continues to grow in leaps and bounds. Marketers are creating their own Twitter accounts, fan pages, blogs, and other social media presences. Media companies such as Meredith, Hearst, Hanley Wood and Vance are responding by offering custom publishing/content marketing offerings. Why not offer custom Reddits to sponsors? These Reddits could feature custom-curated content, audience development services (recommended Reddits), and enhanced branding. While Reddit's technology may be open sourced, promotion and connection to Reddit's audience is highly valuable.

This would require some personnel to provide the services if Reddit were to offer them itself. However, partnering with other Condé Nast properties, Federated Media or agencies could increase speed-to-market. Imagine a series of travel-focused Reddits that could push out flight delays, local happenings, traffic updates, hotel specials, flight specials, restaurant reviews, etc., all based on a specific destination. Sponsorships could be sold by Condé Nast Traveler, who would target local tourism boards, airlines, hotels, etc. [More on custom publishing]

Long term-revenue opportunities

5. Ad Network / Behavioral data

One of the most unique aspects about Reddit is that they are able to store data on both liked content and disliked content, making them an ideal service for premium behavioral ad targeting services. Using something like Semantic Proxy, Reddit could generate standardized information on the content types that readers are interested in. That data could be used to create an ad network or a behavioral data product. An interesting twist would be to market the data to retailers, who have shown some interest in behavioral marketing services such as Rich Relevance or Quantivo.

Leveraging behavioral data too aggressively can damage user relationships, as witnessed by Facebook's privacy fiasco. So, Reddit should aggressively promote the changes that they would need to make to their privacy policy. Even if half of users opted out, you'd still have over 250,000 people a day generating tons of behavioral data on both likes and dislikes. [More on behavioral data and targeting]

What have I missed?

There are so many ways to generate revenue online that it was hard to pick just five. It's a matter of prioritizing which ones get the biggest bang for the buck, and I tried to prioritize my top five accordingly. I've probably missed something, however, and I'd love to hear some other ideas on the subject.

Sponsored Resources

There's no question in my mind that Prescott's "Five ways" are great ideas for many people to monetize their sites and applications without having to charge the users directly, I think that, unfortunately, they may not work for Reddit, and to a greater extent, Condé Nast. Reddit is a community that thrives on the energy of the community itself. In my experience, the community tends to be Democrats, non-religious (or even anti-religion), pro-marijuana legalization, pro-gay marriage and pro-privacy. It is nary a day that there isn't a post about cops/governments/corporations infringing the rights of citizens. It is important to note, though, that this is different than pissed off teenagers rebelling against authority. These are people who very often show respect for the armed forces, government entities, government employees, etc. These are community members that value their independence and rights above all else. Because of that, I think, Reddit has gotten stuck in a lose-lose situation. Redditors tend towards ad blockers (though I believe a majority tend to whitelist ads on Reddit to support the site.) Redditors value projects like the Netflix challenge, but they would be against their own private data being used. They are very willing to give money to each other and to the site (as can be seen in the gold drive), but I think would be less willing to have their information sold to support the site. Which means that Condé Nast will find themselves in a bad situation. Any attempt to monetize the site (other than subscriptions) will be viewed as someone akin to "The Man" coming and taking over the site. And on the other hand, a subscription plan (which, based on posts by Reddit administrators this evening, looks to be in the cards) will probably not bring in enough money to increase revenue to a healthy level. Already Redditors are beginning to murmur about "donations" (though the admins never called it that) to a multi-billion dollar company. Unfortunately, there probably isn't a great way for Condé to get out of this. Ultimately, I think that Condé bought an asset that they didn't fully understand, and now they're looking down an expensive road with not much of a happy ending. So, do I think that these are great tactics for site owners to use? Definitely. Will I think Condé will find success if they go forward with them? No, not the type of success that will lead to many years of increased revenue.

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