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Pinterest CEO Bill Ready is upgrading the company’s business model in a difficult advertising landscape, and investors are taking notice. Analysts at Switzerland-based investment firm UBS published a report yesterday (March 26) highlighting the company’s improvements and crediting Ready. The stock rose 4 percent this morning as a result to $29.27 before falling slightly.
“We think Bill Ready taking over as CEO has driven a philosophical shift in the company’s go-to-market (strategy) that will unlock faster top line growth,” UBS analysts Lloyd Walmsley, Chris Kuntarich and Rachel Freeman said in the report.
Prior to Ready’s installation, the image-sharing social media platform, which went public in 2019, was spending more than it was making most years, according to company earnings reports. Pinterest earned its revenue by selling advertising space.
In need of a new strategy, the board appointed Ready as CEO in June. He formerly worked as the president of commerce at Google and as the CEO of Venmo before that. He is expanding Pinterest’s advertising business by building new tools and partnering with advertising technology companies that can help target ads to the right users, and the investment world is applauding him.
Pinterest’s competitors, as well as other media and tech companies, are fighting over a limited market for online advertising. As of January, Twitter’s daily revenue had reportedly dropped 40 percent from the year prior, according to the Information. Snap is facing similar difficulties and posted negligible growth in its most recent earnings statement as it tries to convince advertisers Snapchat is still worth spending on. Last month, UBS changed its position on Snap and is no longer recommending investors buy stock in the app. Pinterest’s yearly revenue increased 9 percent year-over-year, and while it still lost more than it earned in 2022, analysts are more confident in the company’s long-term potential.
Pinterest’s ad tech partnerships have already started benefiting advertisers, which positions the company for increased revenues in the future, UBS analysts said in the report.
Bill Ready’s plan for Pinterest
Ready’s revamped advertising strategy includes partnering with companies that can improve Pinterest’s targeting and measurement capabilities. It is already working with LiveRamp, a California-based software company, to develop clean rooms, or digital spaces where advertisers and Pinterest can share their data.
The LiveRamp partnership alone has made Pinterest’s ads more effective, and it has opened the door for collaborations with other businesses, UBS analysts said. A future partnership with Google, Ready’s former employer, could be a massive boost for the platform, they said.
Since Ready joined Pinterest, the company rolled out a tool called whole page optimization, which increased the number of ads a user sees when they are shopping on the app. With this launch, Pinterest earns revenue from showing more ads, and users see more relevant ads. It also pleased advertisers because it lowered the cost-per-action, or the price advertisers pay when consumers take an action on the ad, like clicking it, Ready said in the company’s February earnings call.
Pinterest also began implementing mobile deep linking, which allows users to click through Pinterest to a specific page in another app rather than just the app itself. For example, a user that clicks on an advertisement for Nike shoes in the Pinterest app would be directed to the exact listing on the Nike app, rather than the Nike app’s home page. During Black Friday weekend, mobile deep linking accounted for 40 percent of Pinterest’s shopping ads revenue, Ready said on the call.
“People are shopping on Pinterest, and we are helping merchants find end-market consumers,” he said.
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