In reporting its first quarterly results as a public company, Pinterest provided new details on the platform’s advertising plans, which include introducing self-serve ad-buying technology and expanding the base of brands who spend with the service.
Pinterest, the site where people post products and plan their lives, on Thursday reported $202 million in revenue in the first quarter, an increase of 54 percent year-over-year. It also said it reached 291 million monthly users, up 22 percent year-over-year. The performance disappointed investors, however, as the company lost $41 million in the quarter, which was more than Wall Street analysts expected.
Pinterest CEO Ben Silbermann and Todd Morgenfeld, chief financial officer, held a call with analysts to explain how the company hopes to get to its next level in advertising. Here were the most important parts of the strategy:
Self-serve and sales teams
“This is an important year of investment for us as we think about diversifying our advertiser base and that comes in two flavors,” Morgenfeld said. “One is opening up new international markets … We’re also trying to diversify our advertiser base by investing in self-service tools.”
Pinterest increased its number of sales offices internationally from seven to 13 in the past year. But the the self-serve ad platform allows advertisers to set up campaigns without having to be tied to Pinterest’s sales staff. Much like Facebook and Google, marketers can plan campaigns online and it’s automated.
“We’re investing in advertiser diversification because we believe that the ability to put relevant ads in front of our users depends on our ability to get a lot of ads into the auction,” Morgenfeld says, “and the way we’ll do that is by broadening the advertising base.”
Pinterest has a limited advertising base so far. It’s been a well-documented problem since the company announced it was going public and had to file detailed accounts of the business for potential investors. In public filings, Pinterest disclosed that in 2017, one advertiser accounted for 10 percent of all its ad revenue during that period. It did not name the brand.
Most of Pinterest’s advertisers have been brands related to retail and consumer products, which are seen as natural fits on the platform, because people essentially browse the site for shopping tips. Pinterest says it is looking to attract more categories of advertisers, however, such as travel, financial services and auto. Self-serve ads would help attract small- and medium-size businesses.
Pinterest executives did not disclose how fast its advertiser base is growing, saying only that growth is accelerating. Morgenfeld noted that in 2018, half the ad sales growth came from new advertisers, while the remaining half came from existing advertisers.
“We’re still trying to make it extremely simple for an advertiser to put up a campaign on their phone,” Silbermann said. The plan is to "have a really simple way to see how their campaign is doing, and when we talk about self-serve, it’s that entire experience.”
In addition to making its automated ad platform for mobile devices, Pinterest is investing in better measurement technology so that brands can track the success of their campaigns.
Video is increasingly an important format for Pinterest, and Morgenfeld said that video ads contributed three times more to ad revenue in the first quarter than they had in the same period in 2018.
Pinterest is developing video ads that have the same performance options as static ads—instead of just accruing views, the ads can link to websites and sales options. That means they are evolving from just delivering broad brand objectives to measurable goals.
“Video is a premium priced [ad] product for us,” Morgenfeld said. “We’ve seen very strong adoption … it’s a super-compelling format.”