What Does Reddit’s IPO Mean for Its Brand Identity?

This past December, the popular online network Reddit announced it was hiring advisors to help guide the company through its initial public offering. Though it has seen a recent bump in popularity, its audience is still somewhat niche, featuring a fraction of the daily users seen on Facebook, Twitter, Instagram and Snapchat. So what happens to Reddit’s brand as it jumps into the public arena? Will Reddit’s IPO re-shape the audience? Will a new public image affect the brand? 

The Road to Reddit’s IPO

Founded in 2005, Reddit steadily gained popularity through the 2010s. The platform is more straightforward than its social media counterparts, more akin to text-based message boards of old than the rich media experiences of modern social apps. 

In late 2020 and early 2021, Reddit took the spotlight in mainstream media during the so-called meme stock craze. Sparked by a Reddit message board, swaths of ordinary investors attempted to inflate stocks that Wall Street funds had bet would fall. Their plan worked initially, and the stock prices skyrocketed. The meme stock rally eventually crashed, but Reddit’s limelight would prove fruitful for the brand’s image and reputation as an online destination. 

In February 2021, the company aired its first Super Bowl ad. By Q2 2021, Reddit reached $100 million in advertising revenue for the first time — up 192% from the year prior. Between its jump in popularity, the revenue milestone, and a recent round of fundraising in late 2021, analysts expect Reddit’s IPO to be based on a valuation of around $15 billion. 

Reddit’s Small but Significant Audience

While it remains a relatively small player compared to media giants like Google, Meta and Twitter, Reddit is the only platform aside from YouTube that saw statistically significant growth since 2019, according to a Pew Research survey. The same study showed that 18% of Americans use Reddit, an increase from 11% in 2019. 

Now, these numbers aren’t exactly comparable to other platforms. For example, 81% of survey participants say they watch YouTube, and almost 70% are Facebook users. So, 18% is definitely not the biggest piece of the pie here. But, there is still plenty of value for advertisers. Case in point: According to Pew, more than 25% of Americans who make more than $75,000 say they use Reddit. The Reddit audience may be inherently smaller, but it’s also a niche, captive, and higher-income audience, making the average Reddit user a high-quality advertising target. 

So, as Reddit approaches its new public status, what happens to that audience? 

Growth and Controversy

Though it dubbed itself the “front page of the internet,” Reddit has an “anti-establishment” vibe that is arguably part of the appeal. Featuring topics for all walks of life, beliefs, political leanings and human curiosities, Reddit is an internet destination that was largely allowed to grow unfettered by content moderation, as witnessed in the meme craze event.

Of course, this unrestricted environment also attracts unscrupulous characters. For example, in August, Reddit refused to delete threads that downplayed the coronavirus pandemic, prompting more than 70 subreddit groups to go private in protest, affecting millions of daily users. This was after the company had faced similar action during the 2020 George Floyd protests. Dozens of boards went private during that time, accusing Reddit’s admins of harboring racists and promoting hate speech. 

Reddit also faced user backlash in the spring of 2021, following the hiring of controversial disgraced British politician Aimee Knight. After Knight removed a Reddit post referencing her father (who was convicted of heinous crimes), users discovered who she was. They learned her backstory, which included hiring her father to manage her campaign, despite knowing his crimes. Users revolted, shutting down more than 200 boards, eventually forcing the company to cut ties with Knight and admit it hadn’t adequately vetted her. 

These instances didn’t kill Reddit, and they were likely valuable lessons for the company’s public relations team. But, what would those scenarios have looked like for Reddit as a public company? 

The company’s audience is a defining part of the platform. As the audience grows like it is expected to, Reddit will have a tricky balance to strike between the freedom of the Reddit experience and the content moderation users will expect. Essentially, Reddit’s rise to fame is because of its anti-establishment position. Now, it is poised to become part of the establishment, which will require some serious reconciliation. 

The IPO’s Influence on the Reddit Experience

Ultimately, only time will tell if Reddit can reconcile these factors to appease investors and create a healthy balance sheet. What’s clear at this point is that Reddit’s IPO will likely change the company in some tangible ways. More exposure means more users and more ads, which will help grow the company but also increase the company’s needs. Growth will also lead to more content, which will inevitably require moderation — something Reddit has already struggled to manage. To best prepare Reddit for life beyond IPO, company leaders need to simultaneously invest in the authenticity of the Reddit experience while creating new growth opportunities.

Have thoughts on Reddit’s IPO? Want to talk about your own brand community? We’re here for it. Reach out any time.

Featured image Brett Jordan on Unsplash.