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.

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.

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.

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).

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