The Rollercoaster Journey of Reddit and Financial Services

Reddit took over your search results this year. There are tons of studies out there documenting this, but if you’ve been on Google this year, you don’t need a study to tell you that Reddit took over.

Glen Allsop of Detailed did the hard work analyzing 10,000 handpicked product review search results. Discussion forums like Reddit and Quora showed up in over 70% of the search results. Now your grandma is on Reddit getting everything from gardening recommendations to investing advice.

But, Reddit is complicated for financial services. The infamous subreddit WallStreetBets and the trials and tribulations of the #memestock investors have left a bad taste across leaders and marketers. But that narrative can distract us from the fact that real investors and buyers are looking to Reddit for advice.

Dumb Money movie poster.

There are considerations of course. Over the past year, Reddit’s daily active users grew 37% to 82.7 million. Advertising revenue increased by over 39% to $222.7 million. (WSJ)

Reddit thread.

But can Reddit sustain this level of growth? And more importantly, with all their growth being attributed to a Google algorithm change, will one update destroy the platform? Let’s explore.

First, some background. What happened between Google and Reddit?

In August 2023, Google released the “Hidden Gems” update for its search engine. Looking to increase human-generated content in its search results, Google made adjustments to its algorithm, which resulted in “discussions and forums” becoming frequent top results for search queries. While this update boosted results for over seventy discussion sites, Reddit and Quora were the two platforms that benefitted the most from this; an in-depth study on SERP data pertaining to discussion post forums released in February, and updated this month, found that when asking questions about product reviews, discussions and forums were featured 77% of the time, with Reddit appearing in 97.5% of those results. Reddit appeared 14,263 times, and Quora, 3,832 times. Since its release, data obtained from SemRush shows that Reddit’s MAU (monthly active users) has grown from 132 million in August 2023 to 430 million in July 2024.

Reddit usage data.

Google recently made revisions to its engine, taping back Reddit search results volume by approximately 8% last month. Reddit appeared unaffected by these changes in their Q2 letter to shareholders, released earlier this month, where they reported many improvements, including a 54% increase in revenue and a 51% increase in daily active users year over year.

Why Reddit? A community like no other.

Reddit is a digital space unlike any other. With a user base of devoted conversationalists, it is home to countless communities of people looking to discuss their passions. The platform has also long been known as a place where people are unafraid to speak their minds, whether it’s arguing about what the best micro ATX case is (computer-building jargon) or exposing a product review for insidiously attempting to promote an affiliate link.

While it may not seem like it, this unabashed attitude adds value to the social media forum and is part of the reason why more and more companies are starting to come to Reddit for answers. Using third-party API services like Gummy Search, brands are increasingly tuning into Reddit for intel, gathering data on which subreddits their customers use, where they’re being talked about, and what topics are relevant to their industry.

Reddit has long been seen as this kind of mysterious expanse of niche internet conversations where you’re either a Redditor dedicating your life to the cause of digital discourse, or you’re an outsider. While the amount of truth behind this narrative may have been greater in years past, Reddit is expanding, and with this expansion comes a new generation of Redditors who are modernizing the ways in which users interact while maintaining its long-misperceived charm.

Advertising on Reddit

While the unapologetic and variable personalities of Redditors might come off as an intimidating marketing challenge, it’s part of what makes this discussion space such an enticing marketing frontier. In an interview published by ModernRetail, Jim Squires, Reddit’s EVP of Business Marketing and Growth, discussed advertising on Reddit and how companies are seeing more and more success in their ads, and Squires’ message was pretty straightforward, “the more relevant the product is — and the more authentic [and] the more interesting and compelling it is — the better it’s going to be received.”

Morgan Stanley Reddit ad.

Additionally, unlike, for example, the generally candid and opinionated expression seen across X (formerly Twitter), the tone of Reddit changes by the subreddit. This means from a marketing standpoint, no one-size-fits-all strategy can be used on the platform. One can basically think of Reddit as a gauntlet for your marketing strategy. If you’re targeting the right people, sending the right message, and your product is relevant, you’ll see success in your advertising.

For the countless banks, fintechs, and other financial institutions looking to connect with Gen Z and build their next generation of customers, a marketing gauntlet might be exactly what they need. Reddit is predominantly walked by Millennial and Gen Z users, with 44% of survey-able users reported to be between the ages of 18 and 29. Look, Redditors aren’t easy to win over. They’re skeptical, they’re smart, and they take a little bit of extra elbow grease to win over, but they’re engaged buyers. Reddit has done everything in its power to make the most of its newfound growth, and find more ways to reach its users. That includes bringing new improvements to their advertising services, such as generative AI, to help generate low-funnel advertising. These integrations are building off of the momentum Reddit has already started seeing this year, such as a 41% increase in ad revenue and three consecutive quarters of doubling advertisement click volume were among the growth points highlighted in their quarterly report.

It should also be noted that even if you’re not looking to start advertising on Reddit at the moment, there is an incredible amount of insight to be gained from listening to what your customers have to say on the platform. API platforms such as Gummy Search offer services that help companies find where they should direct their ads, as well as where they’re being talked about. Anecdotally, I believe that a massively untapped facet of Reddit is the amount of industry insight that doesn’t see daylight. There are constant conversations being had about what features and improvements users would like to see from services and products in, for example, the finance sector. Industry trends, business ideas, marketing angles, and more are waiting to be found by companies looking to connect with their customers.

Financial Services and Reddit

Brands like American Express, E*TRADE and others have seen a lot of success across Reddit. Across my clients advertising on Reddit, we see higher engagement rates than traditional advertising and better conversions. Of course, good copy, deep targeting, and diligent optimizations are key.

I’ve read way too much about Reddit this year, so am always open to a pal ready to debate and discuss if it’s right for financial services brands.

Some other good Reddit reads:

The Rollercoaster Journey of Reddit and Financial Services