How Pinterest will grow following COVID-19

With COVID-19 lockdowns and social distancing precautions, 2020 was not set out to be a prosperous year for the economy. However, with people spending more time at home, tech companies stepped up to provide entertainment. One market player which has progressed from an underdog role to a growing household name is Pinterest.

Facing a 291% increase in market value in 2020, Pinterest is in the top ten companies which prospered last year. In this article, I will be considering the three main reasons for this growth, the most prominent being the platform’s positive nature in these dark times.

It is safe to say that the last 12 months have been…interesting. From a pandemic, to the Black Lives Matter protests throughout the summer, to backlash from far-right groups supporting QAnon, with the finale arguably being the storming of the Capitol. Social media has not provided a solace from this, with Facebook and Twitter being the main platforms for the spread of ‘fake news’.

The Stop Hate for Profit campaign highlights a pique in advertiser’s discontent with the growingly controversial nature of social media platforms. Over 1000 brands paused advertisement on Facebook in response to the company’s allegedly insufficient moderation of hate speech. However, where did these advertisers go?

Following the campaign, Pinterest’s management reported that advertisers boycotting other platforms increased their spending on Pinterest in the Third Quarter. There are three key reasons why Pinterest is becoming an attractive advertising platform.

The inspiration-focused framework

Pinterest is known for its image-sharing capabilities and focus on inspiring individuals in their own lives. 85% of users use Pinterest when wanting to begin a new project, whilst an overwhelming 98% of users will try new activities they find on the platform. The website is built around selling something, whether it is an idea or a product. This offers two benefits for advertisers.

Firstly, the platform is ‘brand-safe’, as its structure avoids controversies surrounding politics. Pinterest users are seen as neutral, not trying to create commotion regarding sensitive topics. Nobody is outraged by a salsa recipe. This provides a space for advertisers to safely promote products without risk of backlash by ethically aware customers.

Secondly, advertisers on the website do not need to compete with the native content, as the adverts are the native content. Unlike Facebook, where users want to socialise, or Twitter, where users want to post thoughts, Pinterest’s unique selling point is its advertising potential. People are more willing to be advertised to when using Pinterest as that is why they entered the website; ‘inspiration’ is merely another word for advertising. Thus, the experience of being advertised to feels unintrusive, and almost welcomed. This increases the potential success rate for advertisers, making spending on Pinterest more attractive than on similar platforms.

Investment into new tools

Pinterest used 2020 to invest in and adopt a range of new tools on its platform, further increasing useability for users and advertisers.

A new video upload tool increased video uploads on the platform seven-fold in the Third Quarter compared to the previous year, further diversifying the website’s offerings.

Alongside this, Pinterest invested in a tool enabling advertisers to automatically bid on advertising space based on a dynamic pricing model. In the Third Quarter of 2020, this already represented half of the company’s conversion revenue. Whilst not yet on par with similar offerings, such as Facebook’s ‘automated ad’ feature, implementing this early will allow fast growth in coming years.

Pinterest’s audience

Pinterest has experienced a growth in users under 25 years old in the past year, which is an attractive feature for advertisers. This is because of the growing purchasing power of this age-group; hooking young individuals on to products early may promise a lifetime of buying the product. With complaints about Instagram becoming too commercially saturated in recent months from young people, it is likely they will be looking for platforms which offer less abrasive advertising. Thus, Pinterest offers a strong platform for advertising longevity.

Pinterest is still early in its monetization efforts, with average revenue per user at only $1.03 compared to Facebook’s $7.90 average revenue per user. However, the platform offers a brand-safe, easy to use environment, attractive for advertising in the long term. Because of this, it is likely that the platform will grow exponentially in years to come. This is partially due to COVID-19, as everyone has needed a little inspiration to get through the past year.