Reddit is becoming a serious ad channel for brands

Reddit’s ad business is growing, and agencies say that shift is changing how they allocate budgets to the platform. Reddit’s ad revenue grew 75% year-over-year in the fourth quarter of 2025, reaching $690 million and contributing to $726 million in total revenue. According to the report, eleven of the top 15 advertising verticals showed revenue increases of at least 50% in the quarter.

These numbers suggest Reddit is becoming a more established line item in digital media plans. Advertisers are testing formats, evaluating engagement metrics, and increasing allocation where performance aligns with objectives.

According to Digiday, media buyers said some brands are now allocating between 5% and 20% of their paid media budgets to the platform. “This year we have more clients either who have just launched [on Reddit], or are getting ready to launch, than we’ve ever seen before,” Kira Henson, director of paid social and search at Good Apple, told Digiday.

That level of investment shows a shift in perception. Five years ago, buyers said convincing clients to spend on Reddit was difficult due to brand safety concerns. At the time, the platform was seen as high risk compared to more established social networks with standardized content environments and clearer ad structures.

Today, Reddit has matured its ad infrastructure, expanded targeting options, and improved its measurement tools. Media buyers now describe the platform as more stable and suitable for mainstream campaigns. Another media buyer, Shatesha Scales, supervisor of paid social at media agency Rain the Growth, told Digiday, “In 2025 a lot of brands were open to unlocking that budget; in 2026 they’re ramping up.” 

This change is directly connected to revenue growth. When advertisers shift from limited test budgets to recurring allocations, spend compounds across quarters. That transition from cautious experimentation to structured investment supports the reported increase in ad revenue.

Targeting tools are shaping how brands use Reddit

A major factor driving adoption is targeting. Reddit allows advertisers to reach users at the subreddit level or through interest categories. This means brands can appear inside topic-based communities where conversations are already happening.

Ad formats also play a role. Spoiler Ads, for example, require users to tap to reveal creative content. In campaign tests cited by Digiday, JCPenney recorded video completion rates that were 20% higher compared to standard in-feed placements. That type of performance data influences how brands evaluate engagement inside discussion feeds.

Reddit also offers conversation adjacency. Brands can appear inside discussions where users are already expressing opinions, asking questions, or sharing experiences. For advertisers focused on brand awareness and influence, this proximity to dialogue can support upper-funnel objectives.

Automation and AI features expand campaign options

As agencies became more comfortable with the platform, Reddit expanded the tools available to brands. Reddit now offers Dynamic Product Ads, which connect product catalogs directly to campaigns. The system matches products to users based on engagement signals. Reddit has also introduced interactive ad formats that allow users to engage directly with creative elements inside the feed.

Earlier this year, Reddit began inviting advertisers to test Max Campaigns, an AI-powered automated campaign type currently in beta. According to the company, Max Campaigns use machine learning and Reddit Community Intelligence to predict the value of each ad impression.

These developments provide context for why advertisers are increasing budgets on Reddit.

Reddit’s AI search ambition adds strategic context

Reddit’s broader investment in AI-powered search indirectly supports monetization. The platform has been expanding its AI-powered search capabilities and internal discovery tools. In its recent earnings call, Reddit outlined plans to expand tools such as Reddit Answers, which summarize discussions across communities.

While search itself is not a standalone ad product, stronger discovery increases time spent on the platform and deepens engagement across communities. That expansion strengthens the overall ad environment by creating more inventory opportunities and richer user signals.

Executives already see the push into AI search as an opportunity to expand monetization. “Search is not monetized today, but it’s an enormous market and opportunity,” CEO Steve Huffman said during the company's earnings call with analysts.

Industry experts have framed the platform as more than a traditional paid social environment. “It is not just a paid social platform,” Deanna Mulkeen, head of media investment at Wpromote, told Digiday. “It is the future of search [and] it is a rich social platform.”

If Reddit becomes a stronger destination for search-like queries powered by AI summaries, it could increase on-platform discovery. More discovery means more opportunities for brands to appear during research phases, not just in passive feed scrolling.

Where Reddit fits in the funnel today

Despite growing adoption, agencies say Reddit is often used for awareness, niche reach, and community engagement rather than as a primary conversion engine. While some brands are exploring broader full-funnel approaches, many agencies report that conversion performance does not yet match dominant performance platforms like Meta or TikTok. As a result, Reddit is often positioned as a complementary channel rather than a primary direct-response channel.

According to Digiday, agencies report steady growth rather than sudden spikes. Some expect incremental expansion, often in the range of 5% to 10% year-over-year, depending on campaign results and measurement clarity.