Jefferies' recent discussions with advertising agencies found that Reddit continued to pick up social media advertising share during the second quarter. Agency feedback pointed to an acceleration in digital ad growth from the first quarter, with social platforms showing particular strength and Reddit repeatedly mentioned as a beneficiary of reallocated budgets.
Agencies credited Reddit’s gains to several platform attributes: contextual targeting capabilities, an audience that demonstrates higher intent, and the potential for incremental reach. According to agency reports, the social platforms most commonly ceding budget to Reddit included LinkedIn in business-to-business campaigns, as well as Pinterest, Snapchat and X.
Current advertiser use of Reddit’s ad suite remains weighted toward mid-funnel and upper-funnel activity. Newer low-funnel offerings such as dynamic product ads are still in the early stages of adoption, with most advertisers operating in a test-and-learn mode for these performance-oriented products.
Agencies highlighted Reddit’s investments in automation as a factor lowering the entry barrier for smaller advertisers. Specific features referenced by agencies included a product called Max and an integration with Shopify, which together are reported to be encouraging uptake among small and medium-sized businesses.
There is also agency interest in Reddit’s forthcoming search advertising product. Agencies expect that a search product - scheduled by Reddit to become available later this year or early next year - could improve targeting and brand safety, and could allow Reddit to tap budgets typically reserved for search and performance campaigns.
Separately, agencies that tested the advertising product from ChatGPT reported that cost per impression ran meaningfully above industry averages. Those agencies described return on ad spend as unclear, citing underdeveloped measurement capabilities, and said budgets for ChatGPT’s product were drawn from search allocations rather than social media spend.
Context and implications
Agency conversations suggest a shifting distribution of social ad dollars, with Reddit noted for features that appeal to marketers focused on contextual fit and incremental reach. While mid- and upper-funnel applications dominate current usage, platform investments in automation and commerce integrations are reported to be broadening Reddit’s advertiser base, particularly among smaller advertisers. Interest in an imminent search product indicates agencies see potential for Reddit to compete for performance and search-oriented budgets as its ad products mature.