At CES in Las Vegas, companies are placing their bets on what trends will drive growth throughout the rest of the year.
Pinterest, for one, is putting its chips on shoppable ad formats.
“We’re all in on shopping,” Bill Watkins, CRO at Pinterest, told AdExchanger in a sit-down chat at CES. The company’s main focus is making it easier for users to buy through its platform. “There’s going to be a lot of innovations around visual search and discovery, but really in service of shopping.”
AI is already paying off for Pinterest. Its AI-driven recommendation engine is increasing user engagement, Watkins said – which is also paying dividends for advertisers’ performance-based campaigns.
“Users are staying longer, going from one category to the next, because the relevancy of the content we’re showing them is better than ever,” he said, citing investments in artificial intelligence and machine learning as the cause. “Our large language models are 100 times larger and faster today than 12 months ago.”
Watkins spoke to AdExchanger about Pinterest’s lower-funnel objectives for the coming year.
AdExchanger: How did Pinterest’s ad business grow last year? And what do you expect will be your key growth drivers this year?
BILL WATKINS: We continue to outpace the market – 18% revenue growth in Q3 2024. The majority of the revenue is lower funnel, which is part of a broader trend in the market. Two to five years ago, two-thirds of our revenue was upper funnel.
We’ve been investing in our cost-per-click (CPC) and conversion-based, optimized CPM (OCPM) product. In the back half of the year, Performance+, our end-to-end AI for bids, budgets, targeting and creative, exited beta. And the advertisers that account for the majority of our revenue have adopted our conversion API. Those things are really helping us take share of market.
Are these products paying off in terms of advertiser performance?
Advertisers that use Performance+ are seeing about a 20% efficiency gain.
While ad impressions were up 41% year over year in Q3, ad relevance for top ad slots on our search surface also more than doubled over the past two years. I’ve never seen that in my career. You would think those might be in conflict with one another. But we’ve never had greater ad and content density, and we’ve never had greater relevancy.
How do you measure ad relevance?
We’re looking at Pinner engagement against the ads they see. Things like ad close-ups, clicks, but, most importantly, conversions. We’ve more than doubled clicks off the platform for four straight quarters. CPCs have been cut in half. We’ve seen meaningful increases in conversions across the board, with a lot of that built off of direct links, which we released a year ago.
How are you differentiating Performance+ from other AI-based optimization solutions that sometimes get criticized as black boxes?
Advertisers can adopt Performance+ in a bundle, with optimization of bids, budgets, targeting and creative all in one. Or you could go a la carte – say you want to test bids, budgets and creative, but not targeting, or vice versa.
What results are you seeing from your partnership with Amazon, which lets users complete Amazon purchases without leaving Pinterest’s platform?
Account linking with retailers, be it Amazon or others, is having a very positive impact on conversion rates. For users who want to raise their hand, link accounts and share that data, it provides an even more relevant experience for them; and it removes friction when they’re ready to buy.
Does having that transaction occur inside Pinterest give you access to more optimization data?
Pinterest is not the merchant of record. We are not a retailer, nor do we have aspirations to be one. The retailer owns the transaction record and that specific data. But we are working very closely, not just with Amazon but with all merchants, to have an understanding of performance.
And the conversion signals we get – through conversion API, for example – allow us to create relevant and efficient buying opportunities for OCPM campaigns.
How is Pinterest dealing with the patchwork of state privacy laws in the US, and do you expect the privacy landscape to change under the incoming Trump administration?
I’m incredibly proud of our privacy policies.
We are staying close with where we think the puck is going on data privacy and potential regulation. We have relationships in DC. But at the end of the day, we’re putting our users first. Case in point: We were trailblazers in making our platform private only for under-16 users, where other platforms had not taken a stance, or just recently went private by default.
This interview has been edited and condensed.
For more articles featuring Bill Watkins, click here.
