Reddit acquires contextualization company Spiketrap to boost its ads business

Reddit’s acquisition spree is continuing this morning with news that the company is bringing the audience contextualization company Spiketrap’s technology in-house. Deal terms were not disclosed, but Reddit says Spiketrap’s AI-powered contextual analysis and tools will help Reddit to improve in areas like ad quality scoring and will boost prediction models for powering auto-bidding.

The deal signals Reddit’s growing investment in its advertising business as it aims to make it easier for advertisers to target relevant audiences based on interests. This deal also arrives at a time when Apple’s consumer privacy tools, App Tracking Transparency or ATT, have been impacting the effectiveness of online ads across major tech platforms, like Facebook and Snap, as consumers opt out of ads personalization.

Founded in 2016 by Kieran Seán Fitzpatrick, Virgilio Pigliucci and Andrea Vattani, San Francisco-based Spiketrap counts over 20 employees, according to its website. The company touts its proprietary Clair AI technology, which is able to extract the “signal from the noise” of unstructured datasets. Combined with its knowledge graph, the company offers a range of solutions in contextual ad targeting, impact measurement, brand safety monitoring and other research and data-as-a-service solutions, it says.

In particular, it promotes technology that can do things like figure out the entities a piece of content may be referring to, even if they’re not explicitly mentioned in areas like movies, TV shows, games, franchises and more. This AI is able to deal with ambiguities, abbreviations and acronyms, the company notes. Meanwhile, its Emotion AI is also able to detect the sentiment around a post, like excitement, sarcasm or toxicity — the latter an area Reddit has struggled with over the years, often having to shut down hateful and deplorable subreddits, those that engage in harassment and others that advertisers would want to avoid. Most recently, it banned the r/donaldtrump subreddit after the January 6 riots.

“The richness of conversation within our 100,000+ active communities is what makes Reddit so unique and so valuable for advertisers. We believe targeting relevant audiences based on interests and with the context of the conversations they are engaging in helps ensure advertisers are reaching the right people in the most efficient ways,” said Reddit EVP of Ads Monetization, Shariq Rizvi, in a statement about the deal. “We have been actively investing in solutions to this end for some time and this acquisition will round out Reddit’s capability, taking it to the next level. I am thrilled to welcome the Spiketrap team to the Reddit family,” Rizvi added.

Today’s announcement follows other recent acquisitions by Reddit, including Spell, a platform for running machine learning experiments, in June, and natural language processing company MeaningCloud in July. With the former, Reddit could use the ML technology to improve its capabilities across a range of areas — like the recommendations for its newer Discover tab, plus its safety work and targeted ads business. MeaningCloud, similar to Spiketrap, also promoted its ability to extract meaning from unstructured content, suggesting Reddit has broader aims at making rapid improvements in this area, particularly with regard to its ability to serve advertisers.

Reddit says Spiketrap’s 15-person team has already joined the company and will spearhead a number of projects across its ads business going forward. At present, Reddit is currently focused on merging Spiketrap’s tools, technologies and resources with Reddit, and a go-forward strategy for its commercial business will be part of this transition, the company notes.

“Our goal has always been to contextualize language at scale and in realtime to help creators, brands, and platforms genuinely understand and meaningfully engage their audiences,” said Kieran Fitzpatrick, CEO and co-founder of Spiketrap, in an announcement. “We’re looking forward to scaling these efforts even further as part of Reddit.”

Spiketrap raised $3.5 million in a seed round in 2020 but did not disclose a valuation, a Reddit spokesperson confirmed. Spiketrap’s seed round was led by Susa, 645, Pathbreaker and Anorak. Following the acquisition, the Spiketrap team will be taking on senior positions within Reddit’s Product and Engineering organization, where former Spiketrap CEO and co-founder Kieran Fitzpatrick will join as Director of Product, they said.