Reddit opens a Toronto office to serve Canadian marketers

While still a relatively small player in the social advertising game, Reddit is undergoing a growth spurt and expanding to Canada in order to work more directly with brands.

The company confirmed on Monday that it is opening in Toronto, only its second office outside the U.S. after opening in the United Kingdom in September. The Canadian office will include engineering, community and sales teams, the latter working directly with marketers to develop advertising programs.

At launch, the Canadian office will be managed by Reddit’s New York based head of international Tariq Mahmoud, although the sales team will report directly to executive vice-president and president of global advertising, Harold Klaje.

Mahmoud will be hiring a country manager to oversee the engineering and community teams, while Klaje said he will be hiring two sales leaders, one for large clients and one for those mid-market and smaller. “We want to make sure that we’re servicing the whole market, and we have the right team and dedication for our large clients, but also we have the right expertise and dedication for our mid-market and smaller clients,” said Klaje.

In February, Reddit announced that it has raised $250 million in new funding, increasing its valuation to $6 billion. “We decided that now was the right opportunity to make strategic investments in Reddit including video, advertising, consumer products, and expanding into international markets,”  it said at the time. “We are also readying to double the number of Reddit employees this year.”

Late last year, Reddit revealed that it averages 52 million daily active users, and after generating more than $100 million in advertising revenue in 2019, expected its 2020 revenue to increase by 70%.

Reddit said this week that its Canadian users skew young, with 59% between 18 and 34 and about 40% female. They spend an average of 31 minutes a day on the platform. Reddit also claims that 20% of its Canadian users are not on Facebook, 70% are not on TikTok and 35% are not on Twitter.

While those numbers speak to Reddit’s ability to reach a distinct audience, the platform also trails the social media giants in terms of sheer size: Twitter has about 187 million daily users, Snap has 249 million and Facebook 1.82 billion. Facebook sold about $2.6 billion worth of advertising in Canada alone in 2019.

Despite not officially having a presence in Canada, Reddit has already been working with a number of brands to reach Canadian users, among them Tim Hortons, Lenovo and General Mills.

Klaje said the appeal for marketers is Reddit’s wide range (more than 100,000) of interest-based communities, meaning that brands can reach users with specific interests, rather than targeting via user demographics.

“We have specifically an interest-based kind of approach for our users, but also for advertisers,” said Klaje. According to Reddit research, 80% of users welcome brands on the platform. “Communities actually invite brands, and like participating with brands on the platform,” he said. “It’s just about finding the right strategy and balancing the message correctly.”

Reddit offers a number of different advertising formats for brand partners: promoted text or video posts, category takeovers, and “Ask Me Anythings,” which have been closely associated with the platform for more than a decade.

The expansion of Reddit’s advertising business comes as much of the digital ad industry struggles with rising concerns about privacy and changes to the infrastructure upon which the industry was built, such as the end of the cookie.

In some ways Reddit is already where the industry is going, because privacy has always been a priority, said Klaje. “We are not about demographics, we are not about people always having to log-in with their personal identity,” he said.

Legislative changes to enhance consumer privacy align with Reddit’s own philosophy of “not being demographics focused, but being interest targeting focused, and wanting to know people for their hobbies and their passions, not only their gender and their age and all of those kinds of things,” he said.

Reddit users also tend to be more engaged with the topics and pages (or subreddits) they visit.

“The number one reason why people come to Reddit is to seek information,” said Klaje. And they want that information from a community of people connected to a topic. Reddit users tend to research more on Reddit than other platforms, and also trend to trust the information they get more, making them more likely to buy and become higher lifetime value customers.

While Reddit has long had a reputation as a slightly more wild and less restrictive place than other social platforms, it has also made efforts to remove toxic and extreme content that would be less palatable for advertisers.

“Of course we, as any platform, take brand safety in highest regard,” said Klaje.

David Brown