Discord is launching its second ad product as it aims to bring advertising revenue ‘on par’ with subscriptions

Advertisers can target their campaigns by age, geography, and a user’s gameplay history. Sellis said the cost of an overall campaign tends to be large but that they are “competitively priced” versus other platforms such as Netflix that launched their ad businesses with sky-high CPMs — the cost-per-mille, or the cost to reach 1,000 impressions — only to later bring them down.

“Those other platforms gave gone to market with very premium CPMs, sometimes $50-plus in some cases; at Discord we’re looking at something that’s half of that or even less,” Sellis said. (Sellis previously worked on business products at Snap, which also came out of the gate with large CPMs when it first offered ads on Snapchat.)

He added that the design of Quests lends itself to users sharing content with their friends, which boosts the overall impressions a campaign is likely to generate.

Discord ad revenue could one day become ‘on par’ with its subscription business

Growing Discord’s advertising revenue will be crucial as the nearly 10-year-old company looks to turn a profit and plot a path towards a potential IPO.

Discord’s chief executive, Jason Citron, told Bloomberg in March that “at some point, we’d probably go public.” The company has raised around $1 billion in investment to date, according to PitchBook.

Right now, the company generates the vast majority of its revenue from its Nitro subscription service, where users pay either $2.99 or $9.99 a month to unlock benefits like high-definition streaming, custom emojis, and the ability to upload larger files. Otherwise, Discord is free to use. It also makes money by taking a 10% commission from developers who sell their games on Discord and when users pay to boost their communities — known as servers — to a bigger audience.

The company is expected to generate around $600 million in annual revenue this year, Bloomberg reported in March.

“I do foresee that advertising could be a very significant contributor to our business, on par with our subscription business, long-term,” Sellis said.

Discord is currently growing its in-house advertising ranks. It recently hired Adam Bauer, formerly of FaZe Clan, as its VP of sales, and it lists seven open ad sales roles on its careers site.

But Discord is a late entrant in a crowded market. While Discord has grown to around 200 million monthly active users, competitors like Meta and Google have billions — as well as precision-targeting, measurement, and brand safety features that Discord doesn’t yet offer. A laser focus on the gaming category could also limit its potential pool of advertisers.

Hon-Ming Gianotti, strategic industries lead for games at the marketing agency Monks, said that “intimacy” is one of the platform’s unique selling points that Discord should attempt to pitch to the advertising community.

“When you’re communicating directly to a group of friends about specific labeled topics or a bunch of people with similar interests to you, you’re in a very different type of mindset — you’re seeking to actually socialize and communicating with people about real things rather than viewing a thing and reacting in the comments,” Gianotti said.

For advertisers, he added, “The benefit of being a filter or layer or entity that contributes to that intimate experience is exciting.”