🔍Reddit Tests Search Ads as Q4 Guidance Misses $1.05B Estimate

Reddit's ad business needs your search traffic to grow

Reddit is testing ads inside its search results pages, and the pitch to advertisers is simple: reach people at the exact moment they're looking for something. Search for "espresso station" and you might see espresso machines or mugs. Search for "home office setup" and monitors and chairs could show up. The test starts with a select group of eligible advertisers, and Reddit says it will tune the experience based on how users respond. Why should you care? Because Reddit's traffic problem is your traffic problem if you depend on it. Google's shift to AI-powered search is sending fewer clicks to Reddit threads, and AI answers send less traffic to publishers in general. Reddit is also planning a gradual move to a logged-in experience, starting outside the U.S. Logged-out scraping by AI companies gets harder, and logged-in users give advertisers more signals about interests and behavior. Expect fewer anonymous visitors and more tracked accounts. The numbers explain the urgency. Global daily active users were flat at 130.3 million in Q3, but U.S. DAUs fell from 53.2 million to 50.7 million and were down 2% year over year. Reddit beat revenue and EPS estimates, yet the stock dropped because Q4 guidance of $1 billion to $1.03 billion came in under the $1.05 billion Wall Street expected. If the U.S. trend continues, DAUs could fall by a low double-digit percentage by Q4.