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Reddit Acquires Generative AI Startup Memorable AI

By Aisha Counts
Guests attend the Reddit Inc. initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, US, on Thursday, March 21, 2024. Reddit Inc. and its selling shareholders raised $748 million, pricing shares in an initial public offering at the top of a marketed range, the second big tech listing in as many days. Photographer: Michael Nagle/Bloomberg (Michael Nagle/Bloomberg)

(Bloomberg) -- Reddit Inc. is acquiring Memorable AI, a startup that uses generative artificial intelligence to help marketers create better ads, in its first acquisition since going public in March. 

Memorable AI has built technology to help advertisers find the most effective text, images and videos to use in their sponsored messages, and Reddit hopes the acquisition will improve the quality of ads on its service. 

“This acquisition allows Reddit to accelerate our work in optimizing, generating, and selecting ad creative to deliver even better results for advertisers,” Reddit Chief Operating Officer Jen Wong said in a statement. 

New York-based Memorable AI was founded in 2021, and uses AI to help marketers predict how often an ad will lead to a direct action, such as downloading an app or visiting a website. The Memorable AI employees will join Reddit’s advertising team. Reddit did not disclose financial terms of the deal.

Reddit has been investing heavily in both its advertising business and artificial intelligence tools. The company first launched ads nearly two decades ago, shortly after Reddit was founded, but didn’t begin heavily investing in advertising technology until 2018. Since then the company has added a variety of new advertising features, including shopping and video ads.

The social media site makes about 98% of its revenue from advertising, and last year reported $804 million in sales. Ads on Reddit appear in several places, including the main home feed, inside of discussion forums called subreddits and below user posts.

Reddit has also been striking deals with artificial intelligence companies. It signed data licensing deals worth $203 million with companies including OpenAI and Alphabet Inc.s’ Google, to help train their AI models. In May, Reddit announced a pact with OpenAI that would bring its content to ChatGPT, while also helping the social media company add new AI features to its forums.

Reddit had previously acquired AI companies Spell, MeaningCloud and Spiketrap, startups that helped the social media site improve its content recommendations and place ads.

©2024 Bloomberg L.P.