Reddit Revamping Advertising Ahead of IPO
State of Play: In December, we reported that Reddit was considering an IPO, initially targeting a Q1 2024 date and a valuation of $15 billion – a large sum for a platform that sees fewer daily users than Twitter/X or Snapchat, whose valuations are comparable. However, recent updates suggest that Reddit is moving forward with its IPO plans, now aiming for a March launch. In a recent interview, Reddit execs Jen Wong and Jim Squires shed light on how the platform hopes to justify the valuation by revamping its advertising model to include a greater push towards contextual targeting, building out lower-funnel performance advertising, and introducing new ad formats.
Why it Matters: Reddit’s eye-watering $15 billion valuation has some experts wondering what Reddit sees that others don’t. In addition to lagging behind competitors in absolute user counts, its future growth story doesn't look much better, with the platform seeing better growth numbers in 2019 compared to 2023.
Perhaps Reddit may settle for a lower valuation in the future. Regardless, its moves to enhance its advertising capabilities are certainly worth watching. The platform’s unique engagement patterns, in which users engage in in-depth conversations across an abundance of topics, organized in communities called subreddits, may enable it to offer a more interesting (and robust) approach for advertisers. Combined with its monetizing API access, after successfully seeing off a userbase rebellion over the move, Reddit may well be positioned strongly for an IPO and, in turn, become a key advertising channel in the social media ecosystem.
Microsoft to Launch Keyboard Button for Copilot AI Assistant
State of Play: Microsoft has announced that it is adding a new key to the keyboards of Windows PCs, entirely dedicated to its Copilot AI assistant, marking the first intervention by Microsoft in 30 years, when it added the Windows key that takes users to the Windows start menu.
Why it Matters: The move nods to a shift towards AI shaping new and existing hardware; PC makers are, in parallel, adding chips that include neural processing engines specialized for AI tasks. It also underscores Microsoft’s confidence that its Copilot solution will achieve widespread adoption – recall that Copilot is currently priced at $30 per user, per month.
Google Disables Third-Party Cookies in Chrome
State of Play: Google is testing the disabling of third-party cookies for 1% of Chrome users, about 30 million people, as part of its Privacy Sandbox Initiative. The aim is to offer an alternative to cookies for ad serving while prioritizing user privacy. Although popular browsers like Firefox and Safari have already stopped third-party cookie tracking, Google’s Chrome browser has a significantly larger market share with over 60% of the browser market.
This test will expand to more users over the coming months, intending to disable third-party cookies for all Chrome users by mid-2024. Those included in the test will receive notifications and the option to temporarily re-enable third-party cookies if necessary. However, this approach has sparked regulatory concerns regarding Google's growing influence.
Why it Matters: While Google strives to enhance online privacy, advertisers and websites rely heavily on cookies for advertising and personalization purposes:
Impact on Ad Targeting: The loss of third-party cookies will make it more challenging for advertisers to track user behavior and identify whether a publisher's audience matches their target. The absence of third-party cookies may also lead to decreased cost per thousand (CPM) rates, resulting in a drop in revenue for publishers.
Reduced Functionality for Certain Websites: Expect disruptions to the functionality of websites that rely on these cookies, potentially leading to a less seamless browsing experience for users.
Less Personalized Content Suggestions: Lacking third-party cookies reduces the capacity to monitor and comprehend user preferences and engagements across diverse websites, leading to less precise and tailored content recommendations for users.
TikTok's Ambitious Expansion in U.S. E-Commerce
State of Play: TikTok plans to significantly increase its investment in in-stream commerce in 2024, aiming for a tenfold surge in the U.S. e-commerce market. The platform is looking to replicate the success of its Chinese counterpart, Douyin, which generates the majority of its income through in-stream sales. TikTok's focus on in-app sales is part of its strategy to maximize revenue opportunities. Despite some challenges, such as concerns around ownership and the platform's revenue share processes, TikTok's overall spending is gaining traction, with significant user spending reported in 2023. TikTok Shop is also seeing impressive growth, with a focus on offering a trusted transaction and a seamless shopping experience.
Why it Matters: The platform's in-stream commerce offers brands the opportunity to reach a new and expansive audience, particularly Gen Z, and gain valuable insights through real-time feedback and data collection, ultimately driving revenue growth and customer engagement. Additionally, the move reflects the growing trend of social commerce, with social media evolving into significant shopping and product discovery platforms.
OpenAI Launches App Store for GPTs
State of Play: OpenAI recently launched the GPT Store, a platform for developers to showcase and distribute custom text-generating AI applications like GPT-4. Developers must adhere to OpenAI's updated policies and guidelines before listing their GPTs. GPTs, known for their versatility without requiring coding expertise, can cover tasks from answering recipes to analyzing codebases. This launch follows leadership changes at OpenAI, including CEO Sam Altman's temporary departure and return.
Why it Matters: The GPT Store launch is a strategic move by OpenAI to tap into rising AI demand, fostering innovation through a marketplace for custom GPTs. This democratization of AI paves the way for a future where intelligent assistants work hand-in-hand with humans to solve problems and unlock new possibilities.
