Reddit generated a revenue of $35 million from artificial intelligence licensing agreements during the second quarter
Reddit, the popular online discussion platform, has announced a strategic shift towards artificial intelligence (AI) in its second-quarter earnings. This move is aimed at enhancing Reddit's advertising capabilities and improving the user experience on the platform.
One of the key aspects of this AI-focused strategy is the integration of Reddit Answers, a new AI-powered tool, into the core search of the platform. Reddit Answers offers answers through a conversational interface, and its integration aims to establish search as a primary feature across Reddit.
The integration of Reddit Answers has resulted in a significant increase in user engagement. The number of weekly users for Reddit Answers has surged from 1 million in the prior quarter to a staggering 6 million.
In addition to this, Reddit has also reported an increased emphasis on developing AI-powered features for its user base. The company has content licensing agreements with entities like Google and OpenAI, and it has been revealed that these agreements provide AI developers access to Reddit's vast repository of user-generated content.
Reddit's second-quarter results suggest a consistent revenue stream with long-term potential from these data licensing agreements. The "other revenue" category, which includes data licensing agreements with AI providers, experienced a 24% year-over-year growth, reaching $35 million.
Last month, Reddit introduced new features for advertisers, including Reddit Insights and Conversation Summary Add-ons. Reddit Insights is designed to identify trends from the platform's extensive user-generated content, while Conversation Summary Add-ons enable advertisers to integrate Reddit user discussions into ad campaigns.
However, it's worth noting that Reddit did not disclose any data-licensing agreements with AI providers in the second quarter of last year based on the available search results.
In terms of advertising revenue, Reddit reported $465 million, accounting for 93% of its total revenue in the second quarter. This figure underscores the platform's strong advertising business, a key area of focus for the company.
While the strategic pivot towards AI is primarily centred around Reddit Answers at this point, it's expected that the company will continue to explore and develop AI-powered features for its user base in the future.
In conclusion, Reddit's strategic shift towards AI is a significant move that promises to enhance the user experience on the platform and bolster its advertising capabilities. With the successful integration of Reddit Answers and the introduction of new features for advertisers, Reddit is well-positioned to capitalise on the potential of AI in the digital age.
