Markets & Business
Reddit starts testing ads inside its search results
Reddit has begun testing advertisements in its search results pages, just days after warning investors about falling search traffic and issuing fourth-quarter revenue guidance below Wall Street's expectations.
Reddit announced on Tuesday that it’s testing a new ad placement inside its own search results, letting a select group of advertisers show up as users search the platform for products, recommendations, and other information. The company said the ads may surface based on several factors, including how closely they match a user’s query, and that this initial test with eligible advertisers is meant to show Reddit how users respond so it can refine the experience over time. As examples, it pointed to a search for “espresso station” potentially surfacing ads for machines, coffee, or mugs, and a search for “home office setup” surfacing ads for monitors, desks, and chairs.
The timing lines up with broader pressure on Reddit’s traffic. Even after beating Wall Street’s revenue and earnings-per-share estimates, the company’s stock fell when it reported third-quarter results last week, after it guided fourth-quarter sales to $1 billion–$1.03 billion, below the $1.05 billion analysts expected. Reddit tied that shortfall to declining referral traffic from search, as Google’s shift toward AI-generated answers — features like AI Mode that display results directly on the search page — sends fewer clicks to outside sites. The company also reported that global daily active users held flat quarter-over-quarter at 130.3 million, while US daily active users slipped from 53.2 million in the second quarter to 50.7 million in the third, down 2% year-over-year; Reddit said that if the trend continues, daily active users could fall by a low double-digit percentage by the fourth quarter.
With growth from new users harder to come by, Reddit is turning to its existing base for more revenue, which is where the search ads fit in. The ads could become more valuable once Reddit completes a planned shift to a logged-in experience — announced alongside earnings and rolling out gradually, starting outside the US — a move the company says both protects its content from unauthorized AI scraping and makes its audience more attractive to advertisers, since logged-in users offer richer signals for targeting.
Why it matters
The move shows Reddit leaning harder on monetizing existing users as AI-powered search erodes the free traffic that once brought new visitors to the platform.