Reddit, where chaos thrives, tries to clean up to attract ads from big brands

Steve Huffman, chief executive of online chat platform Reddit, is now a self-confessed “Supreme Court nerd.”

After what the company acknowledges as its “wild” early days, the 35-year-old co-founder is now trying to clean up the edgy website known for provocative discussions and fringe groups, while revamping its advertising offering in a bid to woo big brands and move toward profitability.

To that end, Huffman has turned to the history books.

“How do we wrestle with the fact that there are ugly conversations happening in our country when the founding principle is on free expression?” he said. “These aren’t new issues. I look to what people smarter than us have thought about” them.

The strategy is not just ethical but commercial. Reddit has doubled its revenue growth year over year the last two years and is targeting that same pace for its core business this coming year, Huffman said. Staff headcount has doubled over the last year to about 500.

Meanwhile, the group has clinched several high-profile content and advertising deals recently, including with the National Football League and with Google ahead of the launch of its Stadia cloud gaming platform in November.

Reddit has also joined the ranks of Silicon Valley’s so-called unicorns, raising $300 million this year in an investment round led by China’s Tencent Holdings Ltd., giving it a valuation of about $3 billion.

But tempering extreme conversation while also maintaining Reddit’s reputation as a radical bastion of free speech is a delicate balance, especially as many among its 330 million users are quick to accuse it of censorship.

The site’s darkest corners include communities peddling conspiracy theories, and far-right groups that propagate racist and sexist content or promote violence — material that has only become more problematic after attacks such as the Christchurch mass shooting, in which a white supremacist gunman killed 51 people at two mosques in New Zealand.

The company only this week revised its bullying and harassment policies in response to concerns that they had been too narrow and enforcement was patchy.

Founded in 2005, the self-declared “front page of the internet” is known as a hub for esoteric memes, sardonic humor and gamers. One of the most popular websites in the U.S., it is also home to thousands of “subreddit” chat forums, where varied discussion topics range from woodworking to low-carbohydrate ketogenic diets.

Now, Huffman is leading the charge to attract brands to advertise their wares inexpensively on the site, at a time of growing scrutiny over Google and Facebook’s advertising duopoly.

As part of his pitch, he cites a unique audience that tends toward millennials and Generation Z: according to Comscore data from 2018, 17% of Reddit’s users do not use Facebook, 28% are not on Twitter and 43% do not have Snapchat.

Although Reddit’s ad-targeting ability is more limited than that of platforms such as Facebook because its users have online aliases rather than sharing personal information, brands can target by interest, placing standard ads or “sponsored posts” in a particular discussion group.

They can also put experts forward to speak directly to users about a product or topic, in one of the site’s popular “AMA,” or “ask me anything,” sessions. And the group is investing in a “self-serve” platform, which allows advertisers to place ads online without going through its sales team.

“Advertisers are looking for other places to spend. We have a tail wind there in that they’d like alternatives,” Huffman said. And “we’re killing people on price.”

But despite his optimism, the chief executive now faces the unenviable task of convincing prospective clients that their ads will not be associated with any unsuitable content — without upsetting users who value the site for its freedom of expression.

Those who came before him have fallen. Huffman, who initially left the company in 2009, returned in 2015 after then-Chief Executive Ellen Pao garnered a fierce backlash for what was seen by Redditors as a heavy-handed cleanup attempt.

For Huffman, the balancing act was evident most recently when the company decided to “quarantine” — or add warning messages to — a popular but controversial subreddit dedicated to Donald Trump (the president himself once hosted an AMA in the group) after users promoted violence toward Oregon police officers.

His approach for wary advertisers is to give them control over where and how their brand is placed. Reddit now has a human-approved “whitelist” of communities that are deemed safe, while advertisers can also opt for “negative targeting” — requesting that their content not appear near a certain keyword, for example.

More broadly, Reddit is looking to clean up its content by investing in a combination of machine learning tools that recognize suspicious or badly behaved accounts, working together with human moderators who oversee the entire site, Huffman said. It also relies on moderators who are not employees to set standards and monitor individual forums.

So far, the approach has impressed some big advertising names.

“Historically, clients have been concerned about some of the content on the site, but as they move to clean that up, I think it’s helped make it a much more acceptable site for advertisers,” said Mark Read, chief executive of British multinational firm WPP, citing “impressive” engagement on the platform.

Others remain wary until the company becomes more transparent. One potential investor said that they were close to putting money into the group but opted not to after it would not share even the most basic metrics, such as revenue.

Advertisers, too, have voiced surprise over the lack of financial disclosure and acknowledged that it is in the early days of its maturation.

“The test will be how they do over the next 12 to 18 months,” Read said, adding that a lot of platforms struggle to get beyond a certain revenue level.

For now, profitability is a “moving target,” Huffman admitted. “It’s something we’d like to kind of build toward, but our priority ... is really growth and continued development of the business.”

But he says the company’s turbulent past means it is better-placed than others to deal with the future.

“We grew up on the frontier of the internet, so we’ve seen it all,” he said.

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