Jefferies says Reddit gains social media ad share in Q2

Investing.com -- Reddit continued to gain market share in the social media advertising space during the second quarter, according to conversations Jefferies held with advertising agencies.

Agencies reported that digital advertising growth accelerated in the second quarter compared to the first quarter, with particular strength in social media platforms. Reddit was frequently mentioned as capturing additional share of social media budgets.

Agencies attributed Reddit's gains to the platform's contextual targeting capabilities, high-intent audience, and incremental reach. The most common platforms losing share to Reddit were LinkedIn in business-to-business advertising, Pinterest, Snapchat, and X, according to the agencies.

Advertiser adoption of Reddit's offerings remains concentrated in mid-funnel and upper-funnel marketing, while uptake of newer low-funnel products such as dynamic product ads remains in early stages. Most advertisers are still in a test-and-learn phase for Reddit's newer performance offerings.

Reddit's investments in automation tools, including features called Max and Shopify integration, are lowering barriers for smaller advertisers and driving adoption among small and medium-sized businesses.

Agencies expressed interest in testing Reddit's search advertising product, which is expected to become available later this year or early next year. The product is expected to enhance targeting and brand safety while helping Reddit access budgets reserved for performance and search objectives.

Agencies testing ChatGPT's advertising product reported that cost per impression was meaningfully above industry average, return on ad spend was uncertain due to underdeveloped measurement capabilities, and budgets were taken from search rather than social media.

You May Also Be Interested In

• Alphabet Sees FY26 Capex $195B To $205B, Saw $180B To $190B
• DA Davidson Reiterates Buy Rating on Reddit (RDDT) following Google policy change rumor
• Shutterstock's chief accounting officer to resign in August