Reddit Acquires Memorable AI to Transform Advertising Strategy with Generative AI Technology

Reddit is making strides in the advertising world with its recent acquisition of Memorable AI, a startup that utilizes generative artificial intelligence to enhance ad creation. This is Reddit's first acquisition since going public in March. The hope is that the new technology will bolster the effectiveness and quality of ads on the platform.

Memorable AI has developed a system to assist advertisers in selecting the most impactful text, images, and videos for their promotional content. Reddit's Chief Operating Officer, Jen Wong, expressed that this acquisition will advance Reddit's efforts in refining and generating ad creatives, resulting in superior outcomes for advertisers.

Established in New York in 2021, Memorable AI employs its AI to forecast the likelihood of an ad inciting a direct action, like downloading an app or visiting a site. Employees from Memorable AI will be integrated into Reddit's advertising team. The financial specifics of the transaction were not disclosed.

Reddit has been heavily investing in its advertising capabilities and artificial intelligence tools. Although the platform introduced ads roughly two decades ago, significant investments in ad technology only began in 2018. Since then, Reddit has expanded its advertising options to include shopping and video ads, among others.

Advertising constitutes about 98 percent of Reddit's revenue, which amounted to $804 million in sales last year. Ads are visible in multiple areas on the site, such as the main home feed, within discussion forums called subreddits, and beneath user posts.

Additionally, Reddit has been forming partnerships with other AI companies. The platform has secured data licensing agreements totaling $203 million with firms like OpenAI and Google's parent company, Alphabet, to aid in the training of AI models. A notable deal announced in May involved OpenAI, contributing Reddit’s content to ChatGPT and facilitating the integration of new AI features into Reddit's forums.

Previously, Reddit acquired AI startups such as Spell, MeaningCloud, and Spiketrap. These acquisitions have helped Reddit enhance its content recommendations and optimize ad placement on the site.