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Can Reddit Grow Up? -

Stashed in: Interest Graph!, Reddit!, Kleiner Perkins, Monetization, Reddit, Monetization, nyt

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It's a delicate balance:

“One of the things you have to be careful of when you have a site that’s 100 percent community-driven is how best to support that community and not make them feel like you’ve sold out,” said Kevin Rose, general partner at the venture capital firm Google Ventures. “You just don’t want that community to blow up on you.”

Mr. Rose knows a little about this. He co-founded Digg, a link-sharing site similar to Reddit that had millions of visitors at the height of its popularity. Tweaks to Digg’s advertising strategy and site design ended in a mass exodus of its users.

Trying to avoid that fate, Reddit is moving slowly. The company already hosts a gift exchange, for instance, in which Reddit takes a cut of purchases made through participating vendors. There is also Reddit Gold, a premium membership program that users can purchase and award to one another.

“If we’re thinking this hard about the user experience, why can’t we try a little harder about the monetization?” said Alexis Ohanian, a Reddit founder and a member of its three-person board.

The main focus, though, is advertising, a small but growing effort. Four months ago, the company added staff to its sales team, which now has seven people.

It has also hired Ellen Pao, a former partner at the venture capital firm Kleiner Perkins Caufield & Byers, to head up business strategy.

“We’re not monetizing to the full extent that we could,” said Ms. Pao, who made headlines two years ago when she sued Kleiner Perkins in a sexual harassment case. “Our business comes from wanting to be able to continue to serve as a place where people build awesome communities.”

That community is potentially a big prize for advertisers. Links that grow popular on the site often drive a surge of traffic elsewhere online. The activity has caught the attention of brands eager to show ads to large, enthusiastic audiences.

Reddit's big ads are small compared with Google and Facebook:

Ms. Pao and other Reddit officials declined to give specifics on how the push to gain ad dollars is going or to share any of the private company’s revenue numbers. But last year, the company decided to continue spending on expansion while remaining unprofitable, according to a person familiar with Reddit’s finances, who declined to be named because of continuing ties to the company. For Reddit, a large campaign from an advertiser runs in the $100,000 range, according to this person, while a good-size single ad sale is around $20,000.

The advertising strategy relies on leveraging the site’s overall design. Users are able to create different subsections, or “sub-Reddits,” focused on specific topics of discussion. There are over 7,000 active sub-Reddits, with hundreds more created daily.

Reddit refuses to use identity in advertising:

Others say Reddit’s game plan is not where the advertising market is going. Many big brands are experimenting with buying ads through automated auction platforms, like those offered by Google and Facebook. These companies build profiles of users — age, web browsing habits, sex — and use those demographics to deliver better, more targeted ads.

This is diametrically opposed to Reddit’s refusal to collect users’ personal data.

“Reddit is a 1998 product, trying to have a 1998 business model,” said Gina Bianchini, chief executive of Mightybell, a social networking start-up. “How big is the market for interest-based advertising when the biggest customers are moving to programmatic buying?”

Reddit has struggled with advertising from the start. For years Reddit tried, and failed, to get more resources out of Condé Nast, its former parent company, to expand and maintain its business, say people familiar with the internal workings of Reddit, who declined to be named because of continuing ties to the company.

what happened to Ellen Pao's suit?

Still ongoing. They have not reached a settlement yet. 

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