Reddit, the discussion-based, community-driven content platform and self-styled “alternative to social media” is set to become an advertising powerhouse and is already starting to attract the attention of brands looking at offsite retail media.
According to WARC Media forecasts, Reddit has demonstrated remarkable year-on-year growth with global advertising revenue projected to reach $1.8bn in 2025 (+49.6%) and grow to $2.5bn by 2026 (+39.0%), positioning itself as a formidable competitor to established Big Tech and digital platforms.
Reddit’s conversational and text-oriented engagement style gathers like-minded people, while users’ highly targeted search behaviour enables brands to be discovered organically. AI ad targeting and content licensing agreements are further advancing its upward trajectory.
Celeste Huang, Media Insights Analyst, WARC Media, and author of the report, explains: “Reddit’s ad business is currently relatively small, but its impressive ad spend growth, its increasing reach, which now surpasses X, and its investment in AI is catching the attention of a wider pool of advertisers.”
Successfully navigating challenges typically faced by smaller social platforms, its mid- and lower funnel revenue accounts for 60% of its total revenue with top of the funnel brand advertising revenue growing the fastest rate in over three years, according to its Q4 2024 earnings call.
Despite this impressive trajectory, Reddit’s $1.2 billion in annual ad revenue in 2024 accounted for only 0.4% of the total social media advertising expenditure. While it positions itself as “intentionally different” from social media, for now, Reddit primarily finds itself competing for social ad dollars.
To attract advertisers, the company has strategically leveraged AI across its business, from AI-aided content moderation and translation, to AI content licensing deals. Its AI search feature, Reddit Answers, has quickly gained traction with one million weekly users in Q1 2025.
Reddit reported a 31% year-on-year increase in daily active unique users (DAUs) to 108.1 million in Q1 2025. Meanwhile, the platform’s advertising reach has grown to 606 million users — representing nearly one in 14 people worldwide, according to Datareportal analysis, surpassing X’s reach (586 million) and approaching Snapchat (709 million). While analysts note that Reddit’s doubled ad reach since last October may partially be attributed to a change in reporting methodology, the platform maintains strong growth momentum.
Its user base skews towards males (59.8%) but it has diverse age demographics, assisting its self-proclaimed positioning as a “source for knowledge” for all. Most users in the US are aged between 18-34 (41%), while those 45+ account for a third (34%) of users.
Having referred to itself as being the “alternative to social media”, Reddit now wants to be the alternative to AI search answers, emphasising its community-driven, conversational engagement model.
Reddit was one of Google’s top 20 search terms in 2024, and sixth in the last 90 days, according to CEO Steven Huffman. Users are often found to arrive via Google with a question in the hope of discovering an answer on Reddit.
According to Reddit, its top markets by weekly views are the US, UK, Canada, Germany and Australia. For brands trying to reach new audiences, 30% of Redditors are not on Facebook, while 63% are not on Pinterest. However, GWI data suggests that as many as 81.8% of global Reddit users actively use YouTube.
According to Reddit data, a quarter (25%) of Reddit posts are recommendation-related, where trusted users come to discover new products and inform purchase decisions. A full 42% of users rank the ability to ask questions within trusted communities among their top three priorities for product research. And 76% of users believe posts on Reddit are more “honest and truthful” than other platforms. However, nearly one in four recommendation posts elicit a “redirection”, meaning the original poster would consider another brand.
Research shows that authentic brand participation on Reddit yields tangible results, with one weekly organic brand post increasing positive user mentions by 3.5%, while three meaningful comments under user posts can boost positive brand mentions by 2.2%.
As consumers seek reciprocal relationships with brands on the platform, advertisers can leverage conversation-focused formats like Ask Me Anything (AMA) ads and Reddit Pro Trends to build organic strategies that enhance customer retention and satisfaction.
Brands and retail media potential
Reddit’s AI investments are enhancing targeting and lower-funnel capabilities, with advertisers using both Dynamic Product Ads and standard conversion campaigns to achieve 2x higher return on ad spend (ROAS) in Q1 2025.
Its latest MMM meta-analysis found that advertising on Reddit delivers significant gains across full media plans. Reddit was found to be among the top-two paid social platforms in efficiency, with 11% of impact from boosting other channels
This is already attracting brand advertisers and retailers looking at the potential of this platform for retail media. many retailers are using Reddit to advertise, especially to reach niche audiences and engage with potential customers in specific communities. Reddit’s structure, with its focus on subreddits – communities dedicated to specific interests – allows for targeted advertising and engagement with highly relevant audiences.
As a result, Reddit is increasingly becoming part of retailers’ offsite retail media offerings. One is example is CVS, which is partnering with Reddit to expand its advertising reach beyond their own websites and apps, leveraging Reddit’s engaged user base and diverse communities according to Mars United and Retail Brew.
CVS is using Reddit to reach health, wellness and beauty shoppers actively seeking information and advice within relevant communities. Many others are likely to start following suit as offsite retail media starts to gain ground in the year ahead.
