Discord wants to improve its ad game

We wrote recently about how Snapchat doesn’t seem to know whether it wants to be a social media network, with its answer flip-flopping depending on whether it wants to sell more video ads and make more money, or wants to mollify regulators worried about the spread of troublesome content on its platform. Discord is in a similar boat, financially: Like Snapchat, it got its start as a messaging app, but now is looking to make more cash, and is trying to figure out an enticing way to monetize the 200 million MAUs who use its platform primarily for sending DMs to their friends.

Discord, which was eyeballing a big push into the creator space before abruptly pulling out with a round of layoffs in 2023, reportedly makes around $600 million a year. The majority of that money comes from subscriptions to Nitro, the $9.99/month premium version of Discord where users can do things like send larger files in chats, use emojis from different servers anywhere across the platform, and stream HQ video content.

The streaming perk is a popular one—and Discord knows that. Since it launched in 2015, it’s primarily courted gamers, so one of its core direct-message and server functionalities allows users to stream gameplay to their friends. So, when it decided to amp its revenue by debuting its first ad tool earlier this year, we weren’t surprised that ad feature was themed around peer-to-peer streaming.

Called Quests, the tool pings users with a notification that if they play a certain game and stream it to their friend(s) for a certain amount of time, they can earn in-game rewards. This give-back model is not a new one, especially in the gaming space; Twitch does something similar with Drops, where it partners with game publishers to reward viewers with in-game items for watching content about games. Drops are often used for new games or games with current events, like Overwatch League getting a new season or Fortnite having an in-game concert.

Quests also urges word-of-mouth marketing, which can be effective: just look at the success of Apex Legends‘ 2019 launch, where its entire first sweep of advertising involved paying creators big and small to play the game on stream and in videos.

We bring up Twitch because Quests put Discord in direct competition with it, albeit on a somewhat small scale. If the rewards Discord offers through Quests are enticing enough, a streamer might occasionally choose to stream their gameplay privately to friends instead of on Twitch, Kick, YouTube, or other platforms. And, on the opposite side of things, brands might choose to offer exclusive deals to Discord over a streaming platform.

Either way, Quests are part of a push from Discord to monetize the millions upon millions of DMs that get sent on its platform every single day. To help build out that product and other ad tools, it’s tapping executives like former FaZe Clan SVP of Partners and Business Development Adam Bauer as its new VP of Sales, former Snap exec Meena Mutha as Director of Sales, and Twitch’s own former Director of Client Strategy, Stephanie Russo.

Bauer, who was just hired last week, told Digiday that with these hires and the plan for introducing more marketing across the platform, Discord isn’t trying to turn itself into an ad dispenser.

“What Jason [Citron] and Stan [Vishnevskiy], the co-founders, really want is to make sure that Discord stays a place where users are building genuine friendships around play, and so they don’t want that to get lost in building a big ads platform,” he said.

He added that “[t]he beauty of Quests is that it’s a value-driven experience; it’s really rooted in, if you engage with a cool piece of content, you unlock value in the form of an in-game reward or an avatar that’s available on Discord, which people usually pay for. As we think about the future roadmap, and working with more traditional partners and advertisers, we’re going to keep that same mindset.”

This community-based, give-back model could be the key for Discord to get its users to accept ads despite an ever-growing anti-marketing sentiment among Millennials and Gen Z. If it can figure out how to make that model work with brands outside of the gaming industry, it could see some serious returns.