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Shares of Pinterest dropped last week after the social media platform reported quarterly sales that were below analyst expectations, even as it showed double-digit growth in both revenue and monthly active users.
The stock tumble comes during a competitive time for digital advertising, with the biggest players, such as Meta and Google, gobbling up market share at the expense of smaller platforms such as Snap and Pinterest, per a report from Reuters.
“It would appear that market share is going to the behemoths as advertisers look to get the most value for their money, while the smaller guys duke it out for the scraps,” Christine Short, vice president of research at Wall Street Horizon, told Retail Brew.
But Pinterest isn’t sitting still in the face of heightened competition. The platform is investing heavily in new technologies and tools designed to make it a better shopping destination for users, a strategy that it says will bring in more ad revenue in the future.
“Last year, we improved the shopping experience by bringing shopping content front and center into our home feed, search, and related services,” CEO William Ready told investors in a Q4 earnings call. “As a result, we saw engagement with that shoppable content accelerate, as users clicked and saved that content at rates significantly higher than in the past.”
Advertising as content: Pinterest also sees ads themselves as good content, given that many users are coming to the platform with the express goal of clicking through to sellers.
“You’ve seen that in our increase of impressions, ad impressions, while also increasing engagement, demonstrating that the ads can be great content when they use it in a commercial context,” Ready said.
Increasingly, Pinterest is in the business of helping retailers gain customers, as Julie Towns, VP of product marketing and operations, told Retail Brew last month. She stressed at the time that she does not expect these changes to alienate users.
Ready emphasized in the earnings call that Pinterest is focused on building “an alternative social media business model, one that is focused on positivity,” and that advertisers “want to be present in a positive, brand-safe environment that can also deliver performance.”
“We’ve taken a radically different stance than our competitors, and we’re seeing it pay off in the emotional well-being of our users and in our business outcomes,” he said.