Does Pinterest Have an AI Ace in the Hole?

Or is it too late to seriously crack retail media?

About a year ago I wrote a post asking the question “Did Pinterest Completely Blow it on Retail Media?”

My thinking was, Pinterest - perhaps the least well understood of the giant social apps - is all about consumerism. Yet isn’t mentioned as participating in the massive shift in dollars toward Retail Media, which is poised to become at $142 billion global category next year.

Now I’m wondering if the company may have an unexpected card to play, thanks to AI.

I had Pinterest’s chief revenue officer Bill Watkins on my Next in Media podcast this week. Thankfully he didn’t seem to hold my previous post against me.

We talked about how Pinterest had stabilized its business following both a return to earth after a pandemic-fueled boost in users, and a major change in leadership (founder and CEO Ben Silbermann left last year).

During Q2 of this year, Pinterest’s revenue climbed 6% to $708 million, and its Global Monthly Active Users figure increased 8% year over year to 465 million. Solid, but not mind blowing in the context of the growth we’re seeing in retail media or certainly on platforms like TikTok. (For instance, analyst Brian Wieser noted last month that Walmart’s ad business “is now trending towards $4 billion in gross advertising sales this year, which would rank it among the top 15 sellers globally – around the same size as Snap.”)

But things at Pinterest could be poised to change - dramatically.

For starters, the main reason Pinterest isn’t lumped in with various retail media networks is that - duh - it doesn’t sell stuff directly. “We made a very deliberate decision in the early days not to be the merchant of record,” said Watkins, who’s been with Pinterest for nearly a decade.

To be sure, Pinterest may have dodged a bullet by not trying to build commerce early on on its platform. Facebook has struggled on this front more than once. TikTok is about to find out how tough social commerce is in the US.

Over the years, Pinterest experimented with different visions and sales pitches. It was visual search. It was ‘mid-funnel.’

Today, the mission appears broader, and more clear. “We aspire to be the industry’s leading full-funnel solution,” Watkins told me. “When they’re shopping and when they’re ready to buy.”

465 million users who are ready to buy? That should yield an e-commerce advertising windfall. Yet earlier this year, Pinterest inked a deal with Amazon to drive advertisers to the eCommerce giant.

Was that a give up play for Pinterest? Maybe not. As Watkins noted, Pinterest has first party data on millions of logged-in users, which should be hugely valuable in a post-cookie world. But Pinterest also has 300 billion pins - images that people post on the platform - i.e. things they like and want.

In Pinterest’s view, those pins are first party data too. “We’re using that data asset to deliver the best recommended products,” explained Watkins. “That is driving a lot of gains and has gotten a lot of investment…There is a lot of deliberately engineering there.”

Engineering which has resulted in a 50% jump in engagement with “shoppable content” year over year, per Watkins.

It’s true that Pinterest, for all of its strategic pivots, has been talking about computer vision and machine learning well before much of the industry. The more it can do with those pins, the more attractive it could become to brands.

“Brands tell us they want more clicks,” said Watkins. “They know we convert well.”

Now, the company is pushing into generative AI. Yesterday Pinterest held a virtual event for brands that included the unveiling of a creative studio product that should enable brands to make ads, or create assets, for millions of products.

As Watkins explained, Pinterest houses over 1 billion product SKUs, but many of them send users to bland, informational product pages.

AI can potentially turn these pages into attractive lifestyle ads or even content, which should be more engaging “and that much more shoppable,” said Watkins. “Advertisers have been asking for this.”

Theoretically, if Pinterest can turn its 300 billion user-posted images, as well as billions of product links, into customized, super relevant images that appeal to its always in shopping mode users, it should be able to compete for both retail media budgets and even brand dollars.

“There are more than enough dollars for us to drive growth.” said Watkins

There are a lot of ifs and unknowns there. But if Pinterest’s AI tech can deliver, the company will be a long way from blowing it.