Reddit ISO Profits

Social news hub Reddit enjoyed a major get when it interviewed Barack Obama last year. The big get for 2013 was reaching 90 million unique visitors a month, according to the company, on par with the likes of eBay. This season, even Microsoft co-founder and philanthropist Bill Gates joined its Secret Santa gift exchange.

Now, the self-dubbed “Front Page of the Internet” is going for a milestone it has been trying to reach since its founding in 2005: profitability.

After years of experimenting with paid subscriptions and display advertising, Reddit, with just 28 employees, has begun pouring resources into building an electronic bazaar.

Company executives say they increasingly believe such a venue is the answer to their long search for reliable revenue, complicated in part by their fans’ mistrust of advertising.

If Reddit Gifts, as the burgeoning bazaar is known, brings sustainable profitability, it would mark a turning point for an outfit that has exerted an outsized and sometimes controversial influence on Internet culture yet languished financially.

Reddit estimates over 250,000 items have been purchased over the holiday, mostly as part of the 50 or so mostly geek-oriented Secret Santa gift exchanges – where zombie- or fantasy-themed presents, say, change hands – that users have created.

Although Reddit won’t disclose details about how much money it has made from Reddit Gifts or its overall financial performance, it takes a 15 to 20 percent cut of every purchase.

Usually priced between $10 and $25, the goods reflect Reddit’s young and geeky user base, from collages of cats in steampunk apparel to coffee mugs branded by Imgur.com, a repository of funny Web pictures, to an entire category dedicated to bacon-related products. More than 250 merchants supply gifts curated and “up-voted” by the community, much as articles and links are elevated on the Reddit site itself.

The gift exchange made headlines this month after Gates signed up and surprised a Reddit user by sending her a travel book and a stuffed cow, symbol of the charity he donated to in her name.

The company, which is hoping to position itself as a bona fide shopping destination year-round, estimates that only 14 percent of its marketplace revenue comes from the Christmas-season gift exchange programs.

Yet those sales alone could put Reddit firmly in the black, said Dan McComas, the head of Reddit Gifts. He added that the company may choose to reinvest funds in e-commerce customer service and infrastructure.

Chief Executive Yishan Wong, a former Facebook executive, said Reddit was “kind of” breaking even and denied that pressure was mounting on his team to turn a profit.

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Twitter Toying With Money Making Ideas

Twitter is considering the option of placing ads into the live stream of messages, according to the Financial Times. The addition of “promoted tweets” — a more palatable way to say advertising — within the live Twitter stream is bound to turn off many users, at the same time as it attracts businesses looking to reach some of the company’s 300 million users.

Twitter’s executives have been in discussions with strategists at the Cannes Lions International Advertising Festival in France this week to find a way to increase revenues, which disproportionately trail those of social media companies such as Facebook.

Twitter is expected to generate revenues of about $100 million this year. Facebook, by contrast, reaps $3.5 billion from display advertising, according to a forecast by Enders Analysis.

A few other ideas leaked out of these meetings. One was that Twitter would offer mass coupon deals, which hold potential given the real-time nature of interacting on Twitter. A brand profile, which would allow advertisers to pre-schedule their company’s Tweets, is also being considered.

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