Pinterest (NYSE:PINS) has been one of the most interesting internet companies to follow over the past year. The social media platform has seen a huge growth in users and built its audience by focusing on giving those users a visual experience intended to provide inspiration for just about anything, including recipes, artwork, furniture, and fashion.
Pinterest is also proving to be a viable advertising platform, especially when comparing it to other major social media websites such as Twitter (NYSE:TWTR) and Facebook. Twitter, in particular, appears to be struggling by comparison to Pinterest when evaluating audience growth and ad sales.
The data suggest Pinterest may actually be a better advertising platform than Twitter. The two platforms have a similar user base size. However, there are a few advantages Pinterest has over Twitter that allows it to better capture advertising revenue. Here are three reasons why.
Image source: Getty Images.
1. Pinterest’s audience is large and growing faster than Twitter’s
The foremost reason Pinterest is becoming more appealing to advertisers is its large global audience. Pinterest now has over 440 million monthly active users (MAUs) worldwide, of which two-thirds are female. When Twitter last publicly reported its MAUs, the social media site counted 326 million MAUs in 2018. Twitter switched to reporting monetizable daily users (mDAUs) in 2018, so it’s hard to make an apples-to-apples comparison, but analysts estimate that but Pinterest’s user base is growing faster.
The table below shows that Twitter was reporting 187 million mDAUs, an increase of 29% over the reported mDAUs at the end of 2019. That’s solid growth. But the percentage gain falls below the 37% increase in MAUs for Pinterest over the same timeframe. Again, it’s not an apples-to-apples comparison, but it does suggest Pinterest users may be growing faster.
| Metric | 2017 | 2018 | 2019 | Q3 of 2020 |
|---|---|---|---|---|
| Pinterest MAUs | 204 million | 251 million | 322 million | 442 million |
| Pinterest MAU % growth | 23% | 28% | 37% | |
| Twitter mDAUs | 114 million | 124 million | 145 million | 187 million |
| Twitter mDAU % growth | 9% | 17% | 29% | |
| Twitter MAUs | 330 million | 326 million | N/A | N/A |
| Twitter MAU growth | (1%) |
Data source: Pinterest and Twitter financial reports. 2020 figures are as of the end of the third quarter and don’t reflect the full calendar year.
2. Pinterest users have more commercial intent
The user experience on Pinterest often involves scrolling through a visual display of keyword-connected items that can include products, furniture, consumer electronics, clothing, and thousands of other categories and keywords. Search patterns in Pinterest suggest users are searching the images with an inclination to buy some of the items they find. In other words, many Pinterest users have “commercial intent” because they are looking through products with the intent to purchase.
Contrast this with Twitter, which is more of a text-driven platform where the primary use case is for users to have conversations with each other or discover information. The conversations and postings span a wide variety of topics, such as news, sports, TV shows, and politics. These conversations are sometimes about products that other users may want to purchase, but more often are not about consumer products at all. From an advertising perspective, Twitter users do not have the same level of commercial intent as Pinterest users do.
For advertisers in search of interested consumers, Pinterest generally makes it much easier to identify potential customers than Twitter. This would suggest better results for advertisers on Pinterest than Twitter. Interestingly, Twitter currently generates more total advertising than Pinterest.
3. Less controversy on Pinterest is good for business
Finally, Pinterest is a much more “brand-safe” platform to advertise on. Twitter and Facebook have been in the news quite a bit in recent years over allegations regarding users and/or administrators on the platforms bullying, censoring, and/or spreading misinformation. These issues have not yet been a problem on Pinterest, since the nature of the platform revolves around making visual product searches, not conversations over news or politics.
In fact, on Pinterest’s third-quarter 2020 earnings conference call, the company noted that advertisers have been attracted to Pinterest because of its relative lack of controversy. Most companies do not want to advertise their products next to political conversations or hate speech, which makes ad spending on Twitter less appealing than a website focused on positivity and inspiration (such as Pinterest). On the margin, the lack of controversy is good for Pinterest and should help it attract a greater share of advertiser spending.
Pinterest has a bright future
Pinterest is still in growth mode. The company has seen its user numbers significantly expand in 2020 and its financial results have continued to improve, despite the pandemic. Clearly, the company has a lot of things going for it and will continue to benefit as it scales up. This is in contrast to other social media platforms such as Twitter, which may not be as well suited to grow advertising revenue in the future.
— to www.fool.com
