Pinterest Embarks on Ad Expansion with Google Partnership as User Base Nears 500 Million

Pinterest is making a strategic move to boost its advertising revenues by entering into a new deal with tech giant Google. This partnership marks the company's foray into augmenting ad capabilities with its second major third-party ad collaboration, following a prior multiyear agreement with Amazon. The announcement of this collaboration with Google came amid Pinterest's fourth-quarter earnings call for 2023.

The report disclosed that Pinterest experienced a 12% year-on-year increase in revenue, reaching $981 million, although this fell short of what analysts had anticipated. Additionally, the platform's monthly active users climbed to 498 million, revealing an 11% growth from the previous year.

Despite an initial 28% drop in Pinterest's stock price triggered by the lackluster revenue figures, optimism was restored after CEO Bill Ready shed light on the encouraging early outcomes of the Google deal. Ready explained that the integration of Google's ad solutions on Pinterest had commenced a few weeks prior and was already showing promise.

"Through Google's Ad Manager, we're targeting several previously unmonetized markets outside the US, seeking to better monetize our global user base. The early weeks of activation have shown momentum in third-party ad demand, aligning with our expectations," Ready articulated during the call.

He also emphasized the disproportion of revenue contribution, indicating that while 80% of Pinterest users are international, they only contribute to 20% of overall revenue. The Google partnership, therefore, aims to enhance revenue per user on a global scale.

Technological Innovations and Audience Growth

In an effort to bolster user engagement, Pinterest has turned to artificial intelligence and novel formats. A new 'collage' feature, which has been rolled out globally to all iOS users, enables the creation of unique images through the use of stickers and objects. The company has reported that 75% of these collages include a shoppable product pin, although conversion rates were not disclosed.

Last year brought the introduction of an auto-organizing feature, powered by AI, prompting users to curate similar pins into boards. This nudge resulted in a 30% surge in board creation within the platform.

Ready highlighted the utilization of generative AI in enhancing the platform's search guide, aiding users in refining their searches and nudging them closer to purchasing decisions.

Striving for inclusivity, Pinterest has also been piloting a tool since last November that endows search results with a range of body types, offering a more diverse array of results to users.

Pinterest, Google, Advertising