Pinterest may have beat on revenue and profit in the first quarter, but the company is not yet off the hook when it comes to carving out a place for its service in today’s competitive landscape. In particular, Pinterest faces a credible threat with the rise of TikTok in social commerce. The idea that you might be inspired to shop by browsing media shared by others is an experience that Pinterest, in a way, helped kickstart, with its bulletin board-style website where users often saved ideas for things they were considering buying or trying.
But these days, the most common refrain among influenced and inspired shoppers is “TikTok made me buy it,” not “I found it on Pinterest.”
It’s a challenge the company understands it must overcome in order to establish its site as a destination for the next generation of online shoppers.
The Business Wednesday reported fairly solid income, pulling at $575 million in revenue versus $573 million expected and delivering earnings per share of 10 cents instead of the expected 4 cents. But one troubling area was its declining user count. The company said its global monthly active users fell 9% from the same period last year to 433 million in the quarter, below expectations of 437.9 million.
Investors have looked into the decline of the user in the next earnings appeal aimed at better understanding how Pinterest was resisting the TikTok threat.
Pinterest explained that it has invested over the past year and a half in its new video features, like Idea Pins – a kind of first video mashup of TikTok-stye short video content and tappable stories.
These pins aim to attract creators to the Pinterest site, allowing them to record and edit creative videos with common tools such as voiceover recording, background music, transitions and other elements. interactive. But Pins can also include content pages where creators can add instructions, like steps to complete a DIY project or ingredient lists for a recipe. This makes Pins more targeted and actionable compared to some of the content on primarily entertainment-focused destinations, like TikTok or Instagram Reels.
Pinterest has acknowledged that it needs to do a lot of work to catch up to market with video, but thinks it’s now starting to see some traction.
The company said its shift in focus to video came at the expense of some short-term monthly active users, but it’s taking the risk of getting the new video-focused ecosystem off the ground. As a result, the number of Video Idea Pinners grew 15x year-over-year and noted that the feature was attracting a more engaged audience. Pinterest also reported more than 25% growth in Idea Pin save rate quarter-over-quarter. And Pinterest users who follow multiple video creators on the site tend to visit Pinterest more often than those who don’t, the company shared.
“It’s also important strategically because we believe that video as a format is simply fundamental to how people get inspired and act in the future,” said Pinterest CEO Ben Silbermann. .
Pinterest also plans to develop more new publishing features for video, including leveraging its latest Vochi acquisition, which will help creators create better videos that are more likely to inspire action. He is said to be planning to expand his Creator Awards, had spear a Pinterest API for shopping and started beta testing a new feature called Your Shopwhich offers a personalized experience to users by connecting them with products likely to appeal to them.
But Pinterest also said it’s feeling the impacts of lower search traffic and “people’s time spent on competing platforms.” While the former was attributed to an adjustment to Google’s search algorithm during the quarter, the latter was more of a veiled reference to TikTok, in addition to other social apps.
The company pointed out that the United States is its most mature market and one where a number of social media, entertainment and news apps compete for time spent by users on mobile devices.
“We shouted [the] competes simply because there is an enormous amount of options for consumers on the phone at all times,” Silbermann said, without specifically uttering the word “TikTok.”
“Having said that…what we’ve heard from Pinners and what we’re seeing is that we have a pretty differentiated use case…it’s the use case of actually using Pinterest to plan , to prepare for major events, and then, possibly, to factor in purchases. And that’s quite different from an entertainment and news use case,” he added.
But investors were clearly interested in understanding how TikTok, in particular, was impacting Pinterest’s business, prompting a direct question about the growing threat from the short-form video giant whose mobile app just saw the most downloads worldwide during the quarter.
“We don’t have exact fidelity as to where people spend their time,” Silbermann replied. “But obviously the story of the last two years in terms of time lag has been the rise of TikTok as a major place where people hang out,” he admitted, before reiterating that the Pinterest’s focus is on content that inspires action – not just entertainment.
“That’s going to have to be reflected in how we offer incentives to creators, but also how we rank content on Pinterest,” he said, before laying out the vision for how Pinterest will compete. with TikTok.
“The reason why a feed on Pinterest looks different than a feed on a social network, or a feed on a pure entertainment network, is that the content is categorized based on how useful that idea is to make something in the future,” the CEO continued. “As we think about things like Creator Rewards and roll out new ad formats, like Idea Pins that are sponsored, that’s kind of the thesis central behind it all. And that’s in line with the central thesis of Pinterest as a whole, where it’s not a platform to talk to your friends about. This is not a news platform. It’s a platform for you to articulate the things you want to do in your life [and] for us to help you visualize what that end state looks like,” he said.
Pinterest also said it would work to improve its hospitality fee recommendation and the quality of search results, while making Pinterest easier to access and use, even for offline visitors.
But the company stopped admitting its monthly active user [MAU] the loss was due to TikTok or other competitive threats.
Instead, he largely blamed the worldwide drop in user numbers on the Russian-Ukrainian war and declining engagement from other parts of Europe – an impact of around 5 million MAUs. Excluding this situation, Pinterest thought its MAU count would have increased slightly from previous estimates.