Reddit starts testing ads in search results

Reddit is testing advertisements inside its search results, the company announced on Tuesday, days after it warned investors about declining search traffic and issued a fourth-quarter revenue forecast below Wall Street's expectations. A select group of advertisers will be able to place ads against what users search for on the platform: a query for "espresso station," Reddit suggested, might display ads for espresso machines, coffee, or mugs.

Reddit beat analyst estimates for both revenue and earnings per share in its third-quarter results — and its stock fell anyway. Global daily active users were flat quarter-over-quarter at 130.3 million, while US daily active users dropped from 53.2 million to 50.7 million, down 2 percent year over year. Reddit told investors that if the trend continues, daily active users could decline by a low double-digit percentage in the fourth quarter. Its guidance of $1 billion to $1.03 billion in fourth-quarter sales sat below the $1.05 billion analysts had expected.

The missing traffic has a specific destination: it stays with Google. Google's AI-powered search experience, including AI Mode, now answers questions directly on its own results pages, reducing clicks to other websites, and Reddit's declining referrals are tied to precisely that shift. The visitor who once arrived at a Reddit thread after a Google search now receives an answer without leaving.

Reddit's response runs in two directions. The search box that remains on its own site is being sold by the query, with ads matched to contextual relevance. And during its earnings call the company announced a gradual shift toward a logged-in experience, starting in markets outside the United States, giving two reasons: logging in protects Reddit's content from unauthorized AI scraping, and logged-in users are worth more to advertisers because they provide signals about interests and behavior that allow better-targeted, more profitable advertising.

The site that grew on anonymous strangers answering each other is now asking those strangers to identify themselves — not because the answers improve, but because identified users sell. The test, Reddit says, will evaluate how users respond before the placements spread.

A search for "espresso station" on Reddit may now display ads for espresso machines, coffee, or mugs. The same search, typed into Google, increasingly ends on Google.