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Comment by timcederman | Hacker News Reader

Full context of quote:

Andrew: Have you ever regretted selling when you did instead of holding on for a little bit longer?

Steve: A little bit longer, no. Also, when we sold it was the fall of 2006, right before the economy totally tanked. And so, if we had held on a little longer, I think we would have had dark days ahead. If we could have seen the whole future that in four years things would recover and Reddit would be huge and traffic would be great, yeah, I wish I still owned Reddit now and owned it for the last four or five years.

For everything to have gone right for us, to have the stomach to survive that economy, I mean, who knows, like Conde Nast’s umbrella helped us during that economy. We could still hire and pay market salaries when a lot of people couldn’t. So, maybe we wouldn’t have even survived. It’s hard to say.

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well the hiring thing, they only had like what 4 employees?

Yeah, but they've always been reticent to capitalize on traffic with ads, and the ads they do have are empty half the time. I think they could very easily make quite a bit of money, but it would require monetizing their traffic and selling user data to advertisers. This could likely be done in a way that didn't exploit the trust that the community places in the admins, but it would have to be done carefully, openly, and with a significant development investment.

I wonder what percentage of Reddit users run Adblock - I imagine it's much higher than your typical site.

Yes, but how many have specifically whitelisted Reddit?

That's not really the issue. The fact they have adblock installed makes them the type of demographic that's hard to monetize.

Whitelisting Reddit doesn't magically make them a better demographic.

I'm not so sure about that - you have a community that is very tech-oriented and actually volunteering to view ads knowing it is doing the community a benefit. Such people are more likely to pay attention to what is being advertised as well as they're conscious the advertisements are there by choice.

Marketing done carefully on such sites can lead to a much more effective turnover if it identifies with the group it's targeting. A few good examples are the beef jerky company and the Reddit soap rescue done about 12 months ago. Forgotten both their names but can do a search if need be :-)

eh, the thing is, most of the time, if you are selling, say, kingston ram, when you buy advertising, you are trying to exploit a disparity in information access. I buy lots of ram, right? I've used three grand worth of ram so far this month and have 1/3rd of that on order. I want to pay the lowest price I can for acceptable quality (usually defined as being made by one of several brands.) ram. I spend a fair amount of effort seeking out the lowest price on ram.

If you are trying to sell ram to me as a retailer, paying money to reach me is probably going to kill any margin you would get from my purchase... to sell me ram you need to be the lowest price of a particular set of brands that I can find. Getting yourself on google shopping would probably be cheaper, and it would be just as effective (maybe more effective... I assume that when I click thorough a paid add, I expect to pay a premium on the other end to pay for the cost of that click through.)

Now, if you are trying to sell ram to someone who, say, doesn't know that google shopping exists, then maybe you can charge more than google shopping and then pay money for an ad to reach that customer.

So, in general, less-savvy consumers who don't understand how to effectively price shop are far more valuable to advertisers. And reddit users usually don't fall into that 'less savvy' bucket.

Now, this is true for the majority of retailers... people who are trying to sell commodity products.

If, on the other hand, you are trying to build a brand, and you can get your add to somehow imply that you are supporting reddit, or you are part of the reddit community (and there is room for that... by buying advertising space, you are supporting reddit, even though you have selfish motives in doing so.) you can effectively leverage that to build your brand amongst those more savvy users (and more savvy users tend to have control of more resources, over time, simply because savvy users generally make better decisions.)

So yeah... if you are trying to sell ram to me as a retailer, ads are probably not going to help you. But if you are a ram manufacturer or a ram "brand" (like kingston) and you are trying to put yourself on my list of 'acceptable quality' ram vendors, then advertising on reddit could possibly help you.

I can't find a link but a while back on TWIT Leo Laporte said something along the lines of: "Multiple advertisers have declined to spend money with us because our audience is 'too smart'".

The advertisers definition of 'too smart' being: unlikely to be persuaded by advertising, would comparison shop on the internet, and lacked strong brand loyalty.

I think Reddit is in much the same category, add to this that all ads can be 'Reddited' (commented and voted on by the community) and I imagine many brands are terrified of advertising on their as they'd at a minimum have to assign someone to respond to comments and worst case it would turn into a debacle ala Microsoft's IE9 advertising on Reddit (where the PR team answering questions was openly derided as being flaks and doing nothing but answering technical questions with blathering marketing speak).

Advertisers might not have warmed to it yet but I much prefer advertising that is a 2 way street. The good products and services rise to the top whereas the empty marketing speak approaches fail.

Months ago an SMS provider advertised on reddit. Rather than downvote or ignore the link, there was a veritable flame war of people signing up for the beta just to waste the advertiser's time and quite a bit of animosity going back and forth. Even though most of the people in that conversation wouldn't have utilized the service, they attacked the advertiser because anything involving SMS must be spam.

Having witnessed many cases where redditors attacked, I would never consider advertising there. I can only imagine most of their advertisers advertise once and never again.

Don't forget also that a large portion of Reddit users are college kids, and people with very low amount of disposable income.

As I say though, volunteering to view ads doesn't make them a better more marketable demographic - Anti-consumerism Liberal College kids mainly.

Some redditors are college kids. Many, however, are professionals. Just look at the money raised for Haiti, the Colbert Rally, etc. They are notoriously willing to part with their money for things they like. I think the problem is not that the userbase is unmarketable, but rather that capitalizing on it would require more than the typical semi-related ad strategy. They really should create a system whereby advertisers can choose specific types of redditors they want to target. Rate everyone on a Meyers Briggs type scale based upon their voting, clicking, and subscription habits. Package that data into an API that advertisers can easily use to pick out the types of individual they want to target. Thus pro-prop 19 groups could target subscribers of r/trees or people who upvote pro-marijuana stories, without only being able to advertise in pro-marijuana reddits. Conversely, the anti-gay marriage folks who were banned could target people who would likely hold their points of view. This cuts out much of the risk that advertisers currently face, of running into people who quite vocally oppose their ads, and should also help to ensure a higher CTR.

It would require some hardware and development investment, but I think a strategy like this could pay off immensely. Better yet, it wouldn't run afoul of the users as a) no personal information would be given to advertisers, and b) they would be seeing more relevant ads.

From what reddit’s admins have stated, Condé Nast has been unwilling to let reddit undercut its other properties on ad rates—they want reddit to be a “premium brand,” like the New Yorker or Vogue. Anyone who’s waded through the typical morass of racism, sexism, and other cluelessness and juvenilia on reddit knows how hopeless this vision is. Compounding the problem, redditors also like to fancy themselves a premium audience—no joke—so even if Condé were willing to let reddit run the caliber of ads that keep sites like 4chan afloat, reddit would face a massive user revolt. It’s an unenviable situation, but that’s what happens when you attract an audience as socially, intellectually, and demographically unappealing as reddit’s.

Demographics,

http://www.quantcast.com/reddit.com#demographics

45% Female Affluance level relative to US internet: 114/100 "There is a high index of Graduates and Post Graduates here." 31% household income > 100K

https://www.google.com/adplanner/site_profile?#siteDetails?i...

Female: 24% 31% Household income > 75K Bachelor's degree or more: 53%

Yeah this demographic is so unappealing.

First, reddit’s own admins have called out these statistics as inaccurate (even the numbers you’ve cited wildly contradict each other). Secondly, and more importantly, have you seen the kind of content that always floats to the front page? Advertisers willing to associate themselves with content like this discussion (http://www.reddit.com/r/pics/comments/du2sa/wow_she_is_hot_w...) and this submission (http://www.reddit.com/r/funny/comments/d6y0n/once_you_go_bla...) are not typically the kind that pay premium rates. I know reddit likes to think of itself as a community of intellectuals and sophisticates, but this self-image has little basis in reality, and every would-be advertiser looking at the site knows it.

> even the numbers you’ve cited wildly contradict each other

The idea of those two separate was that while they both contradict each other, they both prove the premiumness of reddit demographic.

> First, reddit’s own admins have called out these statistics as inaccurate

Link please.

You gave an unsubstantiated claim that Reddit demographic is

unattractive to advertisers, which are proven to be wrong by two most widely used site demographic markers. Showing two links which are hate speech, racism or worse etc don't prove that the demographic is not advertising friendly.

> I know reddit likes to think of itself as a community of intellectuals and sophisticates ...

Reddit doesn't need to be intellectual to command premium rates. If > 30% of its audience makes > 75K/yr, it has premium ad inventory. Have you seen Icanhascheeseburger's ad rates? :)

Link, as requested: http://blog.reddit.com/2010/07/experts-misunderestimate-our-...

I would just add that reddit’s difficulties selling its ad space—they’ve had to resort to serving Flash games and pretty pictures just to fill the advertising frame, though they spin this e.g. “Instead of an ad, here’s a flower/Just our way of saying thanks”—speak volumes about reddit’s ability to appeal to sponsors of the sort sought by Condé Nast.

They definitely have problems getting enough quality advertisers, but that may have something to do with them not having anyone (until recently?) whose job it is to sell ad space. Vogue does.

Just look at the recent IE9 debacle. It was an 'ask me anything'.

What MS responded with was crappy marketing speak, which would have worked on 'normal' people. Normal people would have swallowed it up. But Reddit did not - ie they are hard to monetize.

What... I can't even... If you can't fool people, they're hard to monetize? Have you tried being honest for a change?

Opera did an IAmA, had ten engineers answering every question in a very informative manner, and I feel that they got a million times better publicity than Microsoft ever did.

... and Opera is still a niche what 2% browser share?

It's not about 'fooling' people though. It's about people being overly skeptical, assuming everything is a scam, assuming conspiracy theories, ulterior motives.

I'm simply saying that the Reddit userbase is untrusting and not an easily monetizable demographic.

I wouldn't describe the response to the IE9 AMA as overly skeptical. People had some serious issues with what MS had done with IE in the past, and asked pointed questions. The response was lackluster, at best. I'm sure if they had just stuck their engineering team in there to begin with, it wouldn't have spun out of (MS's) control as it did. Microsoft screwed the pooch on that one. I don't think you can take that incident as being reflective of advertisers' experience on reddit.

Come now. Those stats are pie in the sky.

If Quantcast said Reddit was mainly Conservative would you believe it?

The community is heavily liberal anti consumerism pro drugs pro adblock college kids.

Still do. Their office is literally a room in the corner.

We have a new guy starting in November, but yes, it is true. We are still in the corner of Wired's office.

We figure we can get at least 8 people in there!

I was the first actual employee (everyone else is considered a founder), and I was hired after the acquisition. Yes, it is true that I would have joined beforehand too for a lot less, but just the same, it was nice to have health care and a steady check.

This is way off topic, but I believe we met at the Founders and Cocktails event last month that was held at the lounge across the street from Santana Row. We chatted for a while about the Reddit vs. Digg battle going on at the time.

Yep, that was me.

I find the market salaries bit odd. I can't remember who it was, but I distinctly remember one of the admins being quite sarcastic with a "we're not here for the money" comment.

He said pay market salaries. Sounds to me like he was paying his employees standard wages, as opposed to having them take pay cuts to make ends meet.

I think I was loosely translating "market salary" into "average salary for the work they do" which I guess isn't an entirely accurate translation.

It's plainly obvious that the reddit guys are overworked (that was half point of reddit gold - they needed to hire more people but CN wouldn't authorize the expenditure), so "market salaries" for their job title wouldn't be the same as market salaries for their responsibilities.

Maybe the admins could be coasting at some big company for the same salary but a small fraction of the responsibility.

That's absolutely true. If I had stayed at eBay, I would be making more money, and would be responsible for a tiny little part of the company.

I think that is all of us. :)

We're not in it for the money, because the money isn't that great. Conde is a private company with no stock either.

Sounds like a dream job :/

No, a dream job would be all the responsibility with twice the money and stock and revenue sharing. :)

I was being sarcastic, what's the upside? You get to hang out with the community on Reddit and get paid for it?

Well, the biggest upside is that there are basically 4 of us running a top 100 internet site, so we each get a lot of responsibility. Also, anything we do affects the lives of literally millions of people, which is pretty cool.

And yes, the warm fuzzies I get when see the reddit community do something awesome are what keep me coming back day after day. Knowing that in some small way, I helped facilitate that awesomeness.

You guys really do an exceptional job running the site, kudos for that (and yes, that includes the chocolate covered granola bars if you so wish). The community has really evolved into something pretty awesome.

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