Reddit NYSE:RDDT rose 1.66% in premarket after Jefferies reported that advertising agencies indicated Reddit continued to gain social media ad share in the second quarter, with digital advertising growth accelerating versus the first quarter. Agencies attributed Reddit's gains to contextual targeting capabilities, a high-intent audience, and incremental reach. The platforms most frequently cited as losing share to Reddit were LinkedIn in B2B advertising, Pinterest NYSE:PINS, Snapchat NYSE:SNAP, and X.
Reddit's ad growth remains concentrated in mid and upper funnel marketing. Lower funnel products such as dynamic product ads are still in early adoption, with most advertisers in a test-and-learn phase. Automation tools including a feature called Max and a Shopify NASDAQ:SHOP integration are lowering barriers for smaller advertisers and driving SMB adoption. A search advertising product is expected to launch later this year or early 2027, which agencies said could unlock performance and search budgets.
Agencies testing ChatGPT's advertising product reported cost per impression meaningfully above industry average, uncertain return on ad spend due to underdeveloped measurement, and budgets drawn from search rather than social, suggesting the OpenAI product is not yet a direct threat to Reddit's social advertising position.