Pinterest has been reshaping itself as a performance marketing platform for the past few years, CEO Bill Ready told investors during the company’s Q4 earnings call Thursday.
That transformation is starting to pay off.
Pinterest reported $1.2 billion in Q4 revenue, an 18% year over year increase – and its first-ever billion-dollar quarter.
Its full-year results were also positive. It netted $3.6 billion in total revenue for 2024, a 19% YOY increase. That’s more than double Pinterest’s 2023 growth rate of 9%.
The platform’s performance changes came to a head during the busy shopping period between Thanksgiving and Cyber Monday. Pinterest saw its largest revenue volume ever during the period. And better optimization means that advertisers’ cost per acquisition declined by 30% YOY during that period.
Pinterest also lowered prices, which can boost conversion rates. Ad pricing declined by 18% YOY, CFO Julia Brau Donnelly told investors. But ad impressions grew by 43% YOY in Q4, leading to the company’s double-digit overall growth.
Behind this growth were improvements Pinterest has made to its lower-funnel advertising offering. These include Performance+ AI ad optimization, new ad formats like shoppable direct links, and first-party measurement tools, such as its Conversion API.
Ready also called out third-party reseller partnerships, which Pinterest launched in Q3, for boosting programmatic demand and supplementing the company’s direct business.
Boosting ad relevance and performance
Pinterest is experimenting with ad load, showing more relevant ads to users “in moments of high commercial intent,” Ready said. In other words, “we can show users in the lower-funnel phase of their shopping journey more ads to help them take action and convert, while keeping ad load lighter when users are in an upper-funnel discovery phase.”
So if you seem like you are about to buy something, you see more ads. If you’re relaxing and doing random scrolling, you see fewer ads.
Pinterest sees providing more relevant ads as crucial to growing its user base.
“Since our users come with commercial intent, these ads are additive to the user journey,” Ready said.
The proof may be in the user stats. Pinterest’s efforts to improve ad relevance coincided with it setting a record for monthly active users. It boasted 553 million MAUs in Q4, an 11% YOY increase.
Programmatic expansion
Although Pinterest prefers to sell ads directly, Ready said, it has been improving its programmatic offering, including opening its inventory to third-party resellers in Q3.
“We’ve made significant progress in rounding out gaps in our auction, with first-party relationships leading the way exactly as we would hope, and new demand efforts providing a compliment when needed,” he said.
But despite its strong 2024, Pinterest has no plans to rest on its laurels. The company believes it has a lot more headroom for courting performance budgets.
For example, some of Pinterest’s largest advertisers now dedicate 80% of their budgets to lower-funnel campaign objectives, Ready said, “which is up significantly over the last two years and significantly higher than the overall mix of lower-funnel that we see across the business.”
Pinterest is already seeing more performance budgets come in from its second tier of advertisers, and it sees more room to improve in this regard going forward, Ready added.
And Ready emphasized that it’s still early days for many of Pinterest’s new lower-funnel products, like Performance+. “I wouldn’t think of them as one-off launches,” he said. “They have compounding effects over not just multiple quarters, but multiple years.”
Clearly, Pinterest is pinning its hopes on performance.
“As we look forward, we’re not changing our strategy,” Ready said. “We’re doubling down, and there’s still a lot more yield from these various efforts as they continue to mature.”
