Reddit has started testing advertisements inside its search results pages, the company announced on Tuesday, Nov. 3, opening a new revenue line just days after it warned investors about declining search traffic and issued a weaker-than-expected revenue forecast. The Reddit search ads test lets advertisers reach people while they look for products, recommendations and other information on the platform, according to the company’s announcement, which was reported by TechCrunch.
The move puts commercial inventory directly into one of the behaviors Reddit has encouraged most heavily in recent years — searching the site itself — at a moment when the company has told shareholders its reach is under pressure.
How the Reddit search ads test works
Reddit described the rollout as deliberately narrow. “Ads in search may appear based on a range of factors, including contextual relevance to a user’s search query,” the company said in its announcement. “This is an initial test with a select group of eligible advertisers. During this test, we will evaluate and understand how users respond to these ads so we can refine the experience for users and advertisers over time.”
In other words, the first phase is as much a measurement exercise as a sales product. Reddit said it would use the test to judge user reaction before expanding or adjusting the format.
Espresso machines, monitors and office chairs
The company offered concrete examples of the kinds of placements advertisers could buy. A search for “espresso station” might display ads for espresso machines, coffee or mugs, Reddit said, while a search for “home office setup” could surface ads for items such as monitors, desks and office chairs.
Those examples point at high-intent shopping queries — the sort of searches that already draw people to Reddit threads hunting for peer recommendations rather than brand marketing.
Google’s AI search and the referral squeeze
The timing is tied to Reddit’s third-quarter results, which it reported the previous week. The company beat Wall Street’s estimates for revenue and earnings per share, but its stock dropped anyway, TechCrunch reported, because of the outlook attached to the report.
Reddit’s fourth-quarter guidance called for sales of $1 billion to $1.03 billion, below expectations of $1.05 billion. According to TechCrunch, that forecast was tied to Reddit’s declining search traffic referrals resulting from Google’s move to an AI-powered search experience. AI search now sends less traffic to publishers’ websites, as features like AI Mode provide answers directly on Google’s search result pages, reducing clicks to other websites.
The ad test, TechCrunch noted, arrives as Reddit reckons with how AI has been changing the web’s landscape and, in turn, the platform’s reach. Investors have been weighing similar questions across the sector, as seen in recent scrutiny of AI-exposed tech stocks.
Flat global users, a decline in the U.S.
Reddit also disclosed that its global daily active users were flat quarter-over-quarter in the third quarter, reaching 130.3 million. In the United States, daily active users fell from 53.2 million in the second quarter to 50.7 million in the third, down 2% year-over-year.
The company went further, warning that if the trend continues, daily active users could decline to a low double-digit percentage by the fourth quarter. That disclosure, paired with the softer fourth-quarter guidance, is what drove the market reaction to an otherwise beat on revenue and earnings. The share price response was covered in detail when Reddit’s stock sank 17% on stalled user growth and its sales outlook.
With audience growth stalling, TechCrunch reported, Reddit is left needing to earn more revenue from the users it already has — which is where the new search placements come in.
The planned shift to a logged-in experience
Reddit used the same earnings announcement to confirm a structural change to how its content is accessed: a planned shift to a logged-in experience. The company said it will make the transition gradually, initially in markets outside the U.S.
That change could make the new ad inventory more valuable, according to TechCrunch. The decision to limit content to logged-in users serves multiple purposes — it protects Reddit’s site from unauthorized AI scraping, and it increases the platform’s value to advertisers. Logged-in users are worth more to advertisers because they provide additional signals about their interests and behavior, allowing for better-targeted, more profitable ads.
Taken together, the two announcements describe a single strategy: wall off the content from automated collection, require sign-in, and monetize the resulting first-party signals through formats like the Reddit search ads now in testing.
What Reddit has committed to so far
For now, the company has drawn tight limits around what it is promising. The search ad placements are an initial test with a select group of eligible advertisers, Reddit said, and the company framed the period as one for evaluating user response. The logged-in transition is to be phased in, beginning outside the United States, with no further timeline disclosed.
Reddit’s announcement and its third-quarter figures were also reported by BusinessGhana, which carried the same account of the ad test, the fourth-quarter guidance and the user numbers.
