Reddit’s Jen Wong on Its Next $1B, AI Acquisitions and Licensing Deals 

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

There’s so much hype around AI. What tangible outcomes did you find while scoping out Memorable?

That was a big part of our evaluation and due diligence, actually talking to customers and looking at case studies of the impact of those who work with Memorable. It has an excellent reputation for driving value for advertisers, giving very specific insights into creative organization.

That’s a great opportunity for driving performance for advertisers, as well as, frankly, automating part of the campaign setup and onboarding process.

Has news of the acquisition prompted any new buyers to get in touch?

There’s excitement about it, and some of our customers are their customers, so it makes a lot of sense for them. They’ve already had positive experiences, so they’re excited that this will become just the core capability. It’s been really positively received.

Can you quantify the impact of AI on Reddit’s business?

We’re slowly adding pieces like the AI-generated headlines. Then there are the raw productivity tools that make the productivity of our sales team even better.

We do watch productivity metrics. We do watch revenue per sales, FTE [full-time equivalent] and the productivity of our teams, how many accounts they can handle, etc. We have seen that grow, and there’s a lot more headroom.

Are there other AI acquisitions on the horizon?

We will continue talking and looking at companies that can accelerate our roadmap.

Other revenue in your earnings grew by 690% year over year to $28.1 million, nearly 10% of your total profit and loss, thanks to deals with Google and OpenAI to license Reddit data for their AI products. Do you want to do more deals with AI search engines?

AI is a nascent tech that will be transformational. We believe in the open internet and users getting access to information. What’s happened is that the world of search and AI and data all collided, so it’s become more complicated. We have said publicly that we are stewards of Reddit’s data, and if you want to use Reddit data, we need to have a conversation about that. We are open the partnerships. We’ve actually done a lot of partnerships, big and small, over the past six months.

It’s hard for me to say how many more will be able to do because what’s important is being able to come to an alignment about Reddit’s terms and policies, as well as commercials.

Do you plan to grow the portion of revenue coming from licensing deals? The danger is being reliant on companies cutting you checks, and then those checks stop coming.

There is an enormous runway and headroom for our advertising business. The addressable market for our users is everybody—those we’ve been building for years and we have a lot of control [over].

It’s a very uncertain landscape. We don’t know with the future holds. We’ve done medium-term deals—not one year but not forever—because this landscape is moving so quickly. So we’re very conscious and we’ve been very thoughtful about that. But the advertising business is our core.