[judge2020]

In one of Christian's posts, reddit agreed that the price was for the opportunity cost of serving that user without ads - since they're not going to get any ad money from these users (and are unwilling to serve ads to these 3p clients since they probably can't guarantee to advertisers the 3p app isn't doing anything shady like hiding the ad while logging an impression).

[ericbarrett]

Something I've been wondering—why couldn't the API just send a batch of ads to be served with the content? Since the apps need an authorized API key, if they don't cooperate in showing the ads then Reddit could simply threaten revocation.

Then users who want "premium" could pay for whatever feature Reddit-side to allow an ad-free experience, or they could even partner with the third party apps to offer it for a cut of the fee.

(This is assuming Reddit is negotiating in good faith, though that seems to be in question.)

[duped]

I think a large part of it is about controlling the experience of reddit and providing guarantees about how ads get viewed. 3P apps have a very "old.reddit" experience where you only get things in your feed from your subs, with no suggestions. And you can force all posts to be collapsed instead of auto-expanded.

When you browse on the 1P Reddit app you no longer have a curated feed. It's filled with suggestions ("because you visited /r/place-you-dont-sub-to before posts"). And on top of that, controlling whether the view is condensed or as expanded cards does not affect ads. So you'll get a giant "he gets us" jesus ad that takes up half the screen - and if you do something like report an ad, say it's not for you (in my case, I selected something like "it's offensive"), you'll still get the same giant ad.

The Reddit experience they want me to have is not the Reddit experience I'm used to from the 3P apps, and I think that's why they're trying to kill them off. People that want a curated list of forums and a few memes/gifs aren't driving engagement as much as they'd like, so they tried to clone TikTok. And it sucks, so I'm gone after June 30th.

[kenhwang]

I work in ad tech, the difficulty in serving ads isn't showing the ads (which can be pretty annoying in itself for advanced ad formats), it's collecting enough metrics consistently enough across platforms to convince the advertisers that fraud and brand safety aren't a concern.

Verification metrics for basic ads are things like: when was the ad shown, how much of the ad was visible, which parts (pixels and video timeline), what content was also visible while the ad was shown, clicks, bot/script/adblock detection, and whether the ad was on-target (age/gender/location of user).

Ideally, these metrics are also independently verified, so Reddit's tracking and the advertiser's own provided/preferred tracking (like DoubleClick Verification).

Typically the video player or ad renderer needs to be customized to collect these metrics and understand VPAID/VAST/VMAP/MRAID for how/when to show the ad and what tracking is needed. Plus support for mixing content and ad encoding formats.

It's basically an arms race to compete against Facebook/Google's ad serving and tracking capabilities and I'd say even most 1st party premium ad publishers with full time ad tech teams often have difficulty consistently passing verification convincingly enough. So it's understandable that Reddit has very low confidence in single developer apps being able to pass the ad verification bar, much less over API which isn't a well worn ad serving path.

[ericbarrett]

So basically, a native app where the publisher has full control can get metadata important to advertisers, especially enabling third-party anti-fraud processes. Makes sense, and thanks for the enlightenment.

[johnnyanmac]

This may sound very ignorant but: why are advertisers so paranoid about the people they pay to? If you are going so far as to track visible pixels of your ad you probably have something more fundamentally wrong with how you're communicating your product.

[kenhwang]

There's a lot of ad fraud in the industry, there's a lot of money in advertising. Everyone is incentivized to say they showed an ad but not actually show the ad. There's a lot of very sophisticated ad fraud operations and the tracking is designed to be difficult to defeat. We've seen app developers try to render ads in hidden iframes or muted behind/under content or on server farms with headless browsers or click scripts being served with the ad.

The default is to not pay for an ad shown until the publisher can prove it was actually shown and independent verification matches. It's a lose-lose situation for the user and publisher to show an ad but not get paid for it (but the advertiser still benefits, so they'll make a good effort to find reasons to not pay).

Brand safety is also the highest priority for most advertisers. They don't want their ads shown next to content they disagree with. Which the publisher also has to prove they've done in a way that can be independently verified.

Some of these problems are very hard to solve with tech, and for these cases, the solution is often "just trust me". It's not uncommon to simply let advertisers have access to audit ad serving code. It's easy to trust a big entity like Google or Facebook or even Reddit, but it's very hard (and a lot of work) to trust random single dev apps (or even companies lead by untrustworthy figures like Twitter).

The bigger (unsolved) problem is: how do you prove your advertising actually worked? How do you convince a customer like Coke or McDonalds with massive advertising budgets and not immediate trackable sale/action that their money was well spent? So far the tech solution is to just provide a lot of data supporting that the ad was served exactly as the advertiser wanted.

[duped]

> Everyone is incentivized to say they showed an ad but not actually show the ad.

People don't want to see ads because ads are intrusive. The solution to this problem that the ad industry sees is to make ads more intrusive. So it's kind of a positive feedback loop of user-hostile garbage forced upon them, and no wonder that people want to make ad-free experiences.

[kenhwang]

I'd say there's two kinds of publishers.

The "good" publishers will simply charge more per ad and do more hidden proof of trustworthiness, such as being more open to code audits/transparency, more user tolerable ad practices/product deisgn to minimize bad behavior/increase tolerability, or better ad targeting to simply demonstrate more effective conversions. Think Facebook (the tradeoff here is they know a lot more personal information about you to be able to do this).

Unfortunately, most ad publishers fall into the "bad" camp where they know they won't receive payout for some portion of their ads, so they increase the amount of ads shown to make up for the shrink or simply show lower paying ads that have more lenient verification requirements. This is more what Google does/encourages.

My experience is advertisers would love to show less ads with higher conversions, because it makes their lives way easier. But they can only buy what's offered, and there's a lot of cheap user hostile publishers desperate for ads (even most of the ad strategy suggestions in this thread are pushing for more ads) and very very few high quality ad publishers.

[phire]

They probably did not negotiate in good faith. But....

I understand the API that the 3rd party apps interact with is powered by the legacy platform. The same platform that powers old reddit.

It doesn't seem like reddit are updating that platform anymore (I haven't noticed any major changes to old reddit in years), and I really don't think it has the ability to serve the same ads that the new reddit platform does. It would take a major refactor to either replicate the full API over to the new platform or otherwise feed ads back to it.

BTW, this also raises questions about how much longer reddit will keep old reddit running. It really looks like they are planning to retire the old platform all-together.

[madeofpalk]

Because ads still need all the privacy-invading telemetry from the client device, which these apps wouldn't want to participate in.

[randomdata]

Which is fine. They don't have to be participants on the network if they don't like the terms of engagement.

Of course, this isn't about ads in and of themselves. It's about Reddit (and, to some degree, tech in general) having lost investor interest and Reddit being this close to bankruptcy, desperately hoping that these 3P clients will provide a stable cash infusion to keep the lights on. Ads alone aren't enough; at least not now with the financial hole they have dug for themselves.

Ultimately, Reddit is panicking and doesn't know where to get the money they need real soon. Their historic practice of another investment round isn't going to work this time. Likewise, slowly transitioning to a paid API, giving developers time adapt like Christian proposed, isn't going to work either as, at that pace, there won't be a Reddit by the time the transition is complete.

[judge2020]

They didn't do it for the money - the money is to make it unrealistic for them to continue in any way, and push more end-users to the official reddit app to participate in their ad network. They knew no app was going to pay those astronomical rates unless it's some personal project that only gets charges a dollar a month or so.

[randomdata]

> They knew no app was going to pay those astronomical rates

Perhaps, but they don't have much choice. If the apps paid a reasonable rate with respect to what is reasonable to app developers, Reddit would still go bankrupt. May as well go big and go bankrupt only if that fails then not try and be guaranteed to go bankrupt.

Thing is, Apollo is on board to pay the big price, but Christian has exclaimed he needs more time to make the necessary changes to support it. Problem is that Reddit doesn't have that much time. Bankruptcy is still inevitable on his needed timeline. The power company doesn't care that you plan to make money sometime in the future when developers have had time to get around to making changes to their software. They want their money when they want it and if you can't make good then and there, that's it.

Remember, they're panicking. Their old model of finding new investment every time the plug was about to be pulled is dead and they weren't expecting that. They need legitimate cashflow now and don't know where else to find it on short notice.

Next will be a massive layoff to follow the small layoff earlier this week to address the haemorrhaging on the expense side. The "everything will be okay in a few days" notice sent to employees today indicates that something "not okay" is coming.

[johnnyanmac]

>If the apps paid a reasonable rate with respect to what is reasonable to app developers, Reddit would still go bankrupt.

I know reddit was never profitable, but I'm not convinced Reddit is so short on money that they can't last to 2024. They'd probably do major layoffs like so much of the tech industry has this deal and lighten that load. From what I heard, Reddit employs 2000 workers and I can't imagine they need that many to keep the site operational (For reference, Twitter had ~4k employees pre-pandemic, and peaked at 7500 employees... I'm not convinced that Reddit's site complexity is a quarter of the largest site in the world, despite reddit having plenty of traffic as a top site itself).

[ballenf]

Plus advertisers want a more trusted-loop to prevent or detect fraud.

[mbesto]

> why couldn't the API just send a batch of ads to be served with the content

One word: control.

[dvngnt_]

the real solution would have been to lock api access behind Reddit premium the user would have to pay and then allow users to enter the API key in a 3rd party app.

but reddit has burned so much good will that users aren't going to want to pay out of spite

[Marsymars]

The guarantee there is a hell of a lot better for 3rd party apps that have to comply with reddit’s ToS than it is for web browsers.