Monetization

Feature for
Reddit
By- Vaibhav
https://www.linkedin.com/in/vaibhav-08a8091b3/
Problem Statement

● You’re VP of Product & Revenue for Reddit

● You realized that your revenue model heavily relies on advertisements

and the paid membership you provide to users to have an ad-free
experience

● You want to expand the monetization streams and launch new

features which could positively impact on the revenue for the
company.

● GOAL: Expand monetization streams to increase the revenue for the

company
 About Reddit
● Reddit is a social news aggregation, web content rating, and discussion website.
Registered members interact with other users across the globe through content such as
links, text posts, images, and videos.

● There are currently 138,000 active subreddits on Reddit2

● MAU has grown from 46 million users in 2012 to 430 million monthly users in 20191

● 62% of Reddit users are male, while the remaining 38% are female3

● Reddit users watch 1.4 billion native videos on the platform every month4

● Reddit generates revenue for the company in 3 ways. Reddit Premium (Paid Subscription),
Reddit Coins & Advertising. In 2020, Reddit reported $170 million in revenue

● Reddit is ranked as the 20th most visited website in the world, with 1.68 billion visits by
august 20215

1. https://backlinko.com/reddit-users#reddit-monthly-active-users
2. reddit
3. https://www.statista.com/statistics/1255182/distribution-of-users-on-reddit-worldwide-gender/
4. https://variety.com/2018/digital/news/reddit-2018-video-metrics-1203077931/
5. https://www.similarweb.com/website/reddit.com/#overview
Current Revenue Model
Reddit Premium
Paid subscription for additional
perks
Perks: ad-free experience, full
access to the r/lounge, 700 free
monthly coins
Cost: $5.99 per month $49.99
per year
Reddit Coins
Virtual goods that Reddit users
can purchase & gift to other
Reddit users for good content
Benefits: access to the
r/lounge(only 1 month/1 week)
Cost: $1.99 to $199.99
TOTAL REVENUE
Advertising
Auction based system:
Advertisers set their daily budget
and how much they’re willing to
pay per bid. And based on what
they set, Reddit will estimate how
many impressions and clicks your
ad can expect
Cost: min daily budget is $5 min
bid per click is $0.10
 Proposed Features
1. Members only subreddit: Here the owner of a subreddit(community) will have an option
create an exclusive paid subreddit within his current subreddit and charge a fees for
joining it

2. Reddit videos ads: This feature will enable monetisation on videos. just like Youtube ads
will be shown in the video content uploaded by Reddit users.

3. Moderator Bot: This bot will help the owner of a subreddit to moderate it. It will automate
most of the work of a moderator and hence the owner won’t have to appoint a lot of
members as moderators

4. Skins for Subreddits: Owners of a subreddit can purchase skins/visual elements to

customize the appearance of their subreddit

Prioritising Features
Out of the aforementioned solutions we will go with 1 & 2 for now as it will be more
beneficial to start with less complex and easy to develop features.
 Feature 1 - Members only subreddit
● This feature will enable the owner of a subreddit(community) with an
option to create an exclusive paid subreddit called Members only

● This paid subreddit will be the part of the parent subreddit

● Members of the parent subreddit can join this Members only

subreddit by paying a one time or monthly joining fees

● Owner of the parent subreddit can either charge a one time or

monthly fees.

● Reddit will take a % (5-10%) of that subscription fees

● The members of the paid subreddit will have an Ad free experience

inside that subreddit

● They will also get an enhanced layout inside the paid subreddit.

● The members will have access to Voice lounge where they can do
group voice chat in real time over any topic
Feature 1 - Members only subreddit

Topic will be decided by the

moderator(s).

User clicks on Become

member button, A
screen will pop up,
displaying the clicks on voice lounge icon
subscription model and
payment options. After
that they will be taken to
Members only
subreddit

cheer, mute/unmute, hangup

and report buttons to access
the lounge

Normal subreddit Members only subreddit with Voice lounge

changed layout, no ads and voice
lounge
 Feature 2 - Video Ads
● In 2017, Reddit rolled out its very own native video feature. This feature
has exploded in popularity since and Reddit users are now watching a
whopping 1.4 billion native videos on the platform every month
(Reddit, 2018).

● Monetising native videos can become a great revenue stream for

Reddit.

● Ads will be shown during the video content. Ads will be of two formats
Images and videos.

● depending upon the length of the video, ads from either format will
be shown. For videos <1min, image format ads will be displayed.

● Reddit will take a percentage(15-20) of the revenue generated by ads

and rest will be given to respective creators

● In order to stop infringement and multiple uploads of same content,

only videos that comply with the set guidelines will be eligible for
monetisation.
Ad in image format
● Reddit premium members will have an ad free experience
 Market Opportunity size
● Members only subreddit
Total # of active subreddits = 130,000 MAU = 430,000,000
Avg # of users/subreddit = 3310

# of active % subreddits creating # of users eligible % users # users Avg price/year Total revenue
subreddit paid subreddit for paid subreddit opting opting in $ in $ (10%)

130,000 80 258,180,000 10 25,818,000 5 12,909,000

● Video ads
Total Yearly
# of video % videos eligible # of videos eligible # of Total # of Avg ad
revenue in $
uploads/ month for monetisation for monetisation ads/video1 ads price
(15%)

1,400,000,000 2 28,000,000 0.5 14,000,000 4 100,800,000

Total yearly revenue($) = 113,709,000

1. sometime ads will be shown sometimes not, not every eligible video will contain an ad every time
Feature Success Metrics
Feature KPI Metric

1. [# of members only subreddit created/ Total # of 1. Percentage of active

active subreddits]*100 subreddits setting up
2. # of click on Become member button members only sub
Members
2. Relevancy of the feature
only 3. [# of users becoming members/ total # of active
subreddit users]*100 3. Percentage of revenue
generating users
4. [# of users dropping off before paying/ total # users
who clicked on become member button]*100 4. Percentage of untapped users

1. Percentage change in avg

1. [{Avg watch time before launching ads - Avg watch watchtime after introducing
time after launching ads}/ Avg watch time before ads
launching ads]*100 2. Percentage of users not
Video Ads 2. [# of users dropping off from videos with ads/ Total responding positively with
# of users who dropped off]*100 video ads
3. Total # of clicks on ads/Total # of views on the ads 3. Average CTR of ads
4. [# of video ads / Total # of running ads]*100 4. Percentage of video ads from
total ads
 GTM Strategy
First we will launch Members only subreddit and once it starts getting enough traction then video ads

1. FEATURE DEVELOPMENT
For both features we will do extensive user research as well analyse the models of other apps having
similar features. Post that we will begin with design and technical development.
Exit criteria: No bugs in the final testing week

2. PRE LAUNCH
We will release members only subreddit for early cohort of 1% of customer base.
Exit criteria: At least 50% of customers disappointed if feature was taken away

3. BETA LAUNCH
We will release members only subreddit for early cohort of 10% of customer base.
Exit criteria: Increased interaction and sign-ups for subscription

4. FEEDBACK
We will ask the users for feedback through a rating popups and Interview some sample users.

5. RELEASE
After making the changes as per feedback, we will roll out the final version of members only
subreddit and then after a month we will launch video ads
THANK YOU! 🚀
https://www.linkedin.com/in/vaibhav-08a8091b3/