Just a few days after warning investors of declining search traffic and revenue expectations that fell short of forecasts, Reddit is looking for more ways to make money from its existing users. On Tuesday, the company announced that it would begin testing advertising spaces on search result pages, allowing advertisers to reach users when they search for products, recommendations, and other information on the platform.

At the time this advertising test was launched, Reddit was dealing with how AI would change the online landscape, as well as the resulting changes in reach.

Although Reddit's revenue and earnings per share exceeded Wall Street's expectations, the company's stock price fell after it announced its third-quarter results last week. The company's guidance for the fourth quarter indicates that sales are expected to be between $1 billion and $1.03 billion, which is lower than the market's expectation of $1.05 billion. This is related to a decline in search traffic referrals from Reddit, and the reason for the decline is that Google has shifted to a search experience driven by AI. AI now provides answers directly through features such as AI Mode on the Google search results page, reducing the number of times users click on other websites, and thus decreasing the traffic flowing to publishers' sites.

Reddit also indicates that in the third quarter, its global daily active users (DAU) remained flat at 130.3 million; however, the number of daily active users in the United States decreased from 53.2 million in the second quarter to 50.7 million this quarter, a year-on-year decline of 2%. The company noted that if this trend continues, the daily active users in the fourth quarter could drop to single digits.

The decision to restrict content to only logged-in users serves multiple purposes – it not only protects the Reddit website from unauthorized AI scraping but also enhances its value to advertisers. Logged-in users are more valuable to advertisers as they provide more signals regarding interests and behaviors, which in turn helps to deliver more targeted and profitable advertisements.