If I had to monetize reddit right now, I would throw up some CPM ads from a premium display network, and then begin aggressively going after big brand advertisers and media buyers. This might mean spending money and hiring at least one ad sales person- but the investment will recoup itself many times over when media buys from big brands start coming in.
Right now, reddit is doing a TERRIBLE job of managing ad inventory, particularly remnant inventory. It also doesn't look easy for advertisers to place ads on reddit. I see a contact form for more information about advertising, but where is your media kit? User demographics? Not all ads are bad, only untargeted ones are. Why aren't there ads for Newegg, or Snorg tees, or collegehumor, etc on reddit? You're in a position to demand premium CPM from advertisers and you're squandering the opportunity.
Right now the ad I see on the front page is "advertise on reddit". This is a terribly wasteful use of remnant impressions, as 99% of your users won't be interested in buying ads, and there is no reason to show them this ad. It will take a few minutes to fill that remnant inventory with a reputable brand ad from a display network.
I understand that you don't want to piss off your users with ads, but Digg manages to generate revenue with strategically placed banner ads without any outcry from users.
I think this problem isn't unique to reddit- it seems like a lot of startups run exclusively by engineers have trouble monetizing intelligently, even when they get significant traffic.
My email is my profile if you want to chat about this further, I can send some links to the kinds of offers redditors might respond to or help you reach out to media buyers who might be interested in doing large buys on sites like reddit.
By the way, reddit can really learn from Demand Media sites like Cracked, who are very very good at monetizing the same type of low quality social media traffic.
il lays out exactly what they need to do, so there isn't much else to suggest. Simply set up some ad placements on the site and get set up as a publisher with the ad network of their choice. The network does all the sales. (Edit: Later on, they can get into do their own direct sales, sponsorships, etc.) They actually were signed up as a publisher for an ad network for a while, I think, because I remember some ad taking over the screen and everyone freaking out. Maybe that scared them away from the idea because they couldn't control the ad types, I don't know.
I don't know what their mobile numbers are, but they need to get set up as a publisher with a mobile ad network too, such as Ad Mob, Millennial or Quattro.
And since they don't know how anything works, they need to get a few thousand dollars and hire a consultant to explain it all to them. I know they are sensitive about pissing off users, but I suspect that their conversations with Conde Nast and any ad network have ended up in frustrated conversations that go nowhere because they don't understand each other. They need a marketing consultant that understands both worlds to bridge the communication gap. Yes, I'm available.
That said, they should immediately experiment w/ adsense, pubcenter, ideas ala stack overflow of embedding amazon referrals onto all books (not at all obnoxious IME), and some of the better display advertisers. Most of these are free and come with basically no commitment so why not. Also, they should embed quantcast's tracking pixel to get some idea about their demographics in a much cheaper fashion than comscore (NB: this could be misconstrued as an advertisement but I think it's good advice.)
Tell them your priority has shifted from gaining market share (page views) to bigger margin (profit=revenue-cost). Business people like increasing margin. And tell them you need to do a number of experiments to figure out what work, which cost additional money. Tell them there are two options: 1. give a new budget for monetization while keeping the existing operational budget, which is already thin in keeping the current site SLA. 2. Cut the operational budget in half, reduce site SLA, and divert the other half to monetization. Reducing SLA means having less servers, less operational staff, slower site, more crash, less visitors coming in, and some unpopular moves to increase conversion. But that's ok since as part of the plan you've stopped seeking for market share.
Be bold and ask more for a new budget. Say you need 20 more racks initially, 9 sales, 2 marketing, 2 biz dev, 4 more engr, and 3 managers. And need 20 more backend servers for the new initiative; dealing with merchants aren't cheap. You need the sales guys to sign up merchants, the marketing guys to figure out what work and manage ad campaigns, the biz dev guys to recruit big merchants like Dell or Amazon and managing ad inventory, and the engineers to build up the merchant facing infrastructure.
Excite them by painting huge upside monetization potential, which is true. Targeted CPC can be very lucrative, like minting money. Online merchants typically will budget 10%-15% on marketing, which is what pays CPC. Think how big the online ecommerce is and take 10% of that. That's why those merchant specific subreddits, deal/coupon, whatnot are so important because the redditers clicking out from those links are very qualified leads for the merchants who are willing to pay dear money for them.
If Conde is still unwilling to invest, then that's just life. Stop investing in increasing operational capacity. Accept the fact that site will run slower and have less visitors. That's fine. That's the max capacity of the site given the budget. Just enjoy the ride. And wait until Conde sells it to someone else who's willing to take it to the next level.
I really think targeted Ads are the way to go. Hell, I wouldn't even mind filling out information to help target ads.
It's incidentally what I think 4chan is missing too. Not necessarily for /b/, but the domain oriented boards coupled with some geoip would make for some pretty targeted ads. I think it's a pretty big loss not letting the little guy spend his $100 if he wants too.
As a registered user you know all the stories I've clicked on, all the stories I've voted for, and the sections I'm following, and with all this information you can't do something meaningful like put an ad or a "suggested link" for a product or service I'd like. I see links to the most random crap ever.
Why is it so hard to apply some sort of affinity metric to the advertising problem?
The sad truth is that if Reddit doesn't advertise, if the developer time is simply spent putting out fires, then it will end up being an irrelevant property. There is an amazing community there, which is a credit to what the site has managed so far, but that community will simply migrate to a better platform. It happened with Digg, it happened with Slashdot, and sadly it is inevitable that it will happen to Reddit unless some big changes are made.
Although I find many aspects of Facebook to be in outrageously bad taste, or rudely invasive, the one thing they've managed to do as a company is grow, build out, and become highly profitable. There are a lot of things Facebook does that are worth studying in meticulous detail, deconstructing and re-implementing, from their process, to their features, to their strategy to maintain growth. Their capability to execute on complicated technical problems is spectacular.
If Conde is unwilling to invest, maybe the best plan is to seek investors to buy out the property and make it an independent venture that's more focused on the site.
I think in a month we made enough for a cup of coffee.
Then, Google payments have been declining for a long time. We tried AdSense and I STILL haven't made enough to get Google to send a check (nice how they'll hang on to your $80 to the end of time, hmm? Wonder how much free advertising Google scams that way). Then, we switched to our own ads and make approx. 800 times as much per day (not an exaggeration).
On the other hand, if only we could charge people for comments we hate! The internet would get so much better...
The big problem is that we spend most of our time just keeping the site up and don't have time to focus on these ideas, and Conde is unwilling to invest.
We're hoping the reddit gold money gives us the flexibility to bring in the talent we need to make some of those ideas happen.