Reddit Users Are the Least Valuable of Any Social Network (cnbc.com)

Reddit's latest funding round values its users at a lower price than any other social network. "The company announced Monday it had raised $300 million in its Series D investment round at a valuation of $3 billion," reports CNBC. "CNBC previously reported the company's annual revenue topped $100 million, according to sources familiar with the matter, and at 330 million monthly active users (MAUs), this would make Reddit's average revenue per user (ARPU) about $0.30." From the report: That estimate would make Reddit's ARPU significantly lower than other social networks, even those with similar MAUs. Twitter, for example, reported 321 MAUs for its latest quarterly report, and with annual revenue of about $3.04 billion in 2018, that would make its ARPU about $9.48. Facebook reported 2.32 billion MAUs in its latest report and ARPU of $7.37. Snap does not report global MAUs, but reported $2.09 ARPU in its latest quarterly report.

Pinterest, which has yet to go public but is preparing for an IPO this year, says on its website it has 250 million monthly users. Pinterest declined to comment on their revenue, but a September article in The New York Times said the company was on track to top $700 million in revenue for 2018. That would bring its ARPU to about $2.80. While Reddit's value per user is much lower than its peers, it is betting its access to a valuable demographic will appeal to advertisers and potentially even draw their dollars from larger rivals like Facebook and Google. The company said half of its MAUs are between the ages of 18 and 24.

Comments

bad numbers

[Anonymous Coward]

I seriously don't believe for a second reddit has 330 million active users per month. I bet they count in this every person that clicks on a search result that takes them to reddit or some reddit thread.

Re:bad numbers

[Anonymous Brave Guy]

I assume all of the big online companies would count that way. At least it's objective, and it's likely to give bigger numbers than any plausible alternatives I can think of.

I'm more interested in this:

While Reddit's value per user is much lower than its peers, it is betting its access to a valuable demographic will appeal to advertisers and potentially even draw their dollars from larger rivals like Facebook and Google. The company said half of its MAUs are between the ages of 18 and 24.

There is a reason that today's young adults are referred to as "Generation Me" in marketing circles and that the phrase "entitlement culture" is heard so often. As someone who has worked in this field, it's not particularly surprising to me that a business where so many of its users are young adults also has much lower revenue per user. If I were starting a new business today, the 18-24s would be literally the last age range I would want as my target market. They have little money, they tend to care more about experiences than possessions, and when they do spend they are heavily fashion-driven and quick to change. What is surprising is that Reddit reportedly thinks this is a valuable demographic.

Re:bad numbers

[Austerity Empowers]

There is a reason that today's young adults are referred to as "Generation Me" in marketing circles and that the phrase "entitlement culture" is heard so often. As someone who has worked in this field, it's not particularly surprising to me that a business where so many of its users are young adults also has much lower revenue per user. If I were starting a new business today, the 18-24s would be literally the last age range I would want as my target market. They have little money, they tend to care more about experiences than possessions, and when they do spend they are heavily fashion-driven and quick to change. What is surprising is that Reddit reportedly thinks this is a valuable demographic.

Bizarre rant. Points for that, but probably wrong.

More likely these users are not as valuable per unit because there is less information to ferret from reddit accounts. They are less "sticky" and don't require or promote as much voluntary disclosure. Facebook, as we have seen, is one step away from being your personal KGB guardian angel, they appear to infest your life and suck everything that you don't explicitly forbid, and a few things that you don't know you haven't forbid yet. We have also seen exactly how valuable that data is to marketing and even hostile foreign nations. Obviously they get paid well for their espionage. Google is only slightly better.

Re:bad numbers

[Anonymous Brave Guy]

For what it's worth, our numbers wouldn't support your theory. We do get decent returns on Facebook ads (and our Facebook metrics do support the theory that 18-24s don't spend much) but we also get decent returns running old-school untargeted ads or referral schemes through other websites or press relevant to our products and services. Facebook has the advantage of being huge and therefore scaling up where often websites for interests have well qualified but small audiences, but it's far from clear that all the profiling is making much of a difference to any metrics that actually matter compared to just advertising in places relevant to whatever interests you're catering for.

Re:bad numbers

[Anonymous Brave Guy]

The entire marketing industry has difficulty getting money out of young adults. This is mostly because young adults don't have much money. It's a market with a few runaway success stories (name one 20 year old you know who doesn't have an expensive smartphone, even if the cost is hidden behind a monthly plan) and then a very long tail of trying to extract blood from a stone.

Re: You

[Z00L00K]

Does this mean that 4chan users are more valuable then?

I'm worthless...

[Anonymous Coward]

Ask me anything...

Least Valuable out of These Five Companies

[mentil]

Wasn't Slashdot's value written down to $0? Is MySpace still around? Digg? Hard to believe Reddit users are 'the least valuable' for a social network.

Re:Least Valuable out of These Five Companies

[JaredOfEuropa]

Perhaps Reddit is less inclined to peddle its users’ privacy for profit. After all that’s where all of these companies derive their “value” from.

Re:Least Valuable out of These Five Companies

[Anonymous Coward]

Wasn't Slashdot's value written down to $0? Is MySpace still around? Digg? Hard to believe Reddit users are 'the least valuable' for a social network.

It's actually -$0.02.

-my two cents

Re:Least Valuable out of These Five Companies

[PolygamousRanchKid]

Wasn't Slashdot's value written down to $0?

That would be an underachievement for Slashdot users if we were merely valued at $0.

I would hope that advertisers see us as a highly negative value.

In other words, advertising to us actually hurts their product sales.

Re:Least Valuable out of These Five Companies

[supremebob]

I would think that Slashdot's eyeballs are pretty valuable, as most of us are probably 40+ year old IT workers with six figure salaries.

Compare that to Reddit, where most of their customers are broke college students sharing dumb memes with each other and downvoting everyone that disagrees with them.

Sure, most of us here are smart enough to use ad blockers, but it seems that Slashdot has found ways around that and snuck in enough sponsored content to keep them afloat.

Re:Least Valuable out of These Five Companies

[ceoyoyo]

$0.30 a user seems much more reasonable. It's hard to believe Facebook manages to rake in almost $8. Perhaps this is investors realizing that can't last.

Re:Least Valuable out of These Five Companies

[lgw]

Would love to see evidence ad companies are wasting billions of dollars a year understanding their market...ad targeting has been going on since.....newspapers in the 18th century at least

That's not what he's saying. Advertising e.g. bicycles on a cycle-related reddit is targeted advertising, but it doesn't require tracking individual user browsing history. Advertising bicycles later on to that same user when he's looking for e.g. a video card is what doesn't seem to yield much.

Interpretation

[Anonymous Coward]

OK, so how are we going to interpret this?

Is Reddit bad at selling their users data or is it that Reddit users doesn't share as much of it as users on other platforms.

In the case of social media "being worth the least" means that you keep your important data private and won't get fooled by personally targeted ads.

Re: Interpretation

[Anonymous Coward]

This. If reddit values it's users least among social media platforms (in dollars), it values it's users most among social media platforms (as humans).

No surprise there

[ReneR]

Ps: can we stop selling each other's users and advertising content and get back to developing selling real stuff, fly to moon and mars and fun things like that?

Re:No surprise there

[Opportunist]

But that's hard! Doing real stuff is really hard.

Selling something you get for free to people who then sell the promise of selling more of stuff you don't have to people who don't want it is way easier. Not very useful, I give you that, but where's the profit in that?

Wow

[Opportunist]

Just imagine what kind of people litter antisocial networks, and now we get to hear there's a place where even MORE worthless people hang around!

I gotta see that!

Reverse correlation

[lucasnate1]

Funny, cause reddit is also one of the networks with the highest quality of comments. I guess that according to ad-tech companies, people are valuable the more they are stupid & passive consumers.

Re:Reverse correlation

[mccalli]

Depends where. On the big subs that hit /r/all, definitely. On the smaller ones that are more what you're interested in? Tends to be a bit more friendly and higher quality. If you're after fake internet points then you'll had to the big subs. If you're after discussion....go small.

Reddit is a Social Network?

[zenasprime]

Since when? Are we now just calling any website that has user accounts and topic discussion a "social network" in hopes of investment money?

And if so, hasn't that bubble already popped?

Re:Reddit is a Social Network?

[msauve]

Are we now just calling any website that has user accounts and topic discussion a "social network"

Well, yea, because that's what it is. Heck, usenet is a social network.

It was an investment by the Chinese government

[danbuter]

Reddit got the investment, and now any post that gets too popular and is negative about the Chinese government gets removed from /r/all and /r/popular. It was proven quite quickly because several BIG posts about Tianamen Square were removed that day. Basically, reddit has become an arm of the Chinese propaganda department.

Re:It was an investment by the Chinese government

[conejo especial]

Reddit got the investment, and now any post that gets too popular and is negative about the Chinese government gets removed from /r/all and /r/popular. It was proven quite quickly because several BIG posts about Tianamen Square were removed that day. Basically, reddit has become an arm of the Chinese propaganda department.

China: putting the red back in reddit.

Re:It was an investment by the Chinese government

[UnknownSoldier]

"To learn who rules over you, simply find out who (or what) you are not allowed to criticize." -- Kevin Strom (misattributed to Voltaire)

Because Reddit doesn't ...

[Qbertino]

... spam you with ads as much as other services so.

Reddit isn't about selling out it users

[Darren Hiebert]

Reddit users and their personal aren't being exploited for profit like other social networks. Simple as that. Reddit is a social network made to serve the users; not to serve the users as a dish to someone else. If others do not see Reddit users as a high commodity, all the better!

Re:Reddit isn't about selling out it users

[nine-times]

Also, the way it's used is different. People tend to be anonymous, and even have multiple identities for posting different kinds of content, so it's hard to know what even constitutes a "user". It's more discussion based (long-form discussion rather than quick posts), with a lot of independent communities, so I'd imagine it's hard to make much of an impact with a quick post engineered by a social media team.

Re: You

[drinkypoo]

Sure, if you want something trolled, doxxed, or ddosed, or someone swatted.

Re:reality vs stock value

[dittbub]

I've only been purged from the donald sub and the bernie sanders sub. The site has its safe spaces sure but that is the nature of the beast. The ability to ban can be abused. There are "watchdog" type subs though that call out their hypocrisy

General-interest publications

[tepples]

there seems to have been some evidence recently that running ads that are heavily personalised/targeted isn't necessarily much more effective than the traditional approach of running your ads in places where your target market are likely to be found.

Which leaves a problem for publishers of general-interest publications. A special-interest publication attracts inherently targeted advertisements, but it may not have sufficient ad sales budget to make advertisers aware of its (smaller) audience. A general-interest publication may have more of an ad sales budget, but an ad that reaches every reader of a general-interest publication is less effective than an ad that reaches only a targeted subset. In fact, Beales and Eisenach report that in 2014, advertisers were paying three times as much to place interest-based ads compared to ads based only on context.

Or should general-interest publications switch to a paywall model, as many sites affiliated with major newspapers and magazines have been doing lately?

Re:General-interest publications

[Anonymous Brave Guy]

I am personally a sceptic about relying too much on ad-funded content as a business model, particularly online. It's clear which way the winds are blowing in terms of ad-blockers, and while it was possible for a while for those who didn't know how to block to subsidise those who did, that model isn't sustainable as knowledge grows. I don't expect that shutting interested visitors with ad blockers down with some snotty "You need to disable your ad blocker to read this article" kind of message is going to work either, because hardly anyone really wants to read much of anything so badly that they won't just close the tab at that point.

Perhaps I'm something of a hypocrite, because while my own businesses charge real money for what they offer, including online, and while I personally don't have accounts on sites like Facebook because I value my privacy enough to choose not to, my businesses do advertise on some of those sites (among other places). But then as long as everyone is genuinely informed of what's going on and in the case of social network the users are trading their privacy willingly for the services they value in return, I don't see a moral dilemma here.