Reddit’s quest for advertiser performance budgets has kicked into high gear.
The platform reported second-quarter earnings of $281 million, largely driven by growth in non-endemic verticals and spending from small and midsized businesses, putting it on track to generate $1 billion this year.
And artificial intelligence is going to further power the performance of those ads.
Last week’s acquisition of creative AI startup Memorable AI (which went from founding to strategic exit in three years and counts clients like Hellmann’s, Katana and NotCo) for $19.9 million will let buyers identify, test and serve the predicted best-performing creative across Reddit’s environment.
Chief operating officer Jen Wong reveals the strategy behind the Memorable acquisition, plus how it can grow to a $2 billion ad company, (and rival the ad revenue of Pinterest and Snap, per eMarketer).
This interview has been edited for clarity and brevity.
What’s driving you to $2 billion in ad revenue?
It’s the work that we’re doing. I feel really good about our strategy. We can still make the ad platform easier and more automated. There’s a lot of headroom in performance. Yes, we doubled click volume, but [we can] improve our models and signal collection even more to drive efficient conversions and volume of conversions for advertisers.
You see us testing ads in comments. That’s very, very early. It’s a very important, high-intent page, not a contributor to our revenue, but that’s an opportunity for us, in addition to other spaces on Reddit, like search. We continue executing against our strategy, which is to be the leader in contextual and interest advertising, to be a full-funnel solution for advertisers large, midmarket and SMB, and there’s a lot of headroom.
There are a ton of creative AI startups. What was special about Memorable AI?
We’re always looking at [developing] pieces of our ad stack. We were planning to organically invest in insights related to the best creative. Memorable is one of the leaders in this area. It’s an expert in understanding what kind of creative can really drive action and outcomes for advertisers.
We’ve done a number of these acquisitions very successfully—Spiketrap was one—where we bolt them onto our company. In this case, we have technology, as well as talent. Starting next year, we’ll be able to see the benefits of that integration