Pinterest's Transformation: Gen Z Shopping Trends and Advertiser Growth

Pinterest has transformed into Gen Z's top shopping destination, driving significant growth for advertisers.

### Pinterest's Transformation: Capturing Gen Z's Shopping Power
* 📈 Pinterest has evolved from a digital window shopping platform to a thriving marketplace, resulting in a **record turnout at their annual marketing event for advertisers**.
* 🛒 Over the past two years, the platform has seen **more than double the number of clicks to advertisers** year on year for three consecutive quarters, showcasing its **enhanced product-market fit**.
* 👥 Gen Z constitutes **over 40% of Pinterest's users**, marking it as the **largest and fastest-growing demographic**, with many stating they use the platform primarily for **shopping**.
* 💰 With Gen Z's buying power expected to **surpass that of baby boomers** in the next five years, Pinterest is positioning itself as a **key shopping destination** for this demographic.
* 🚀 The platform is broadening its reach to various advertisers, including both large companies like Walgreens, which has seen a **55% improvement in click-through rates**, and smaller businesses like Rug Eyeballs, which has **tripled its clicks at half the cost**.
* 🔍 Pinterest emphasizes its strength in visual search shopping, with **over 80% of usage** coming from its mobile app, and **more than half of users** visiting specifically to shop.
* 🧠 The platform's investment in AI and unique user signals allows it to provide **tailored recommendations**, enhancing **engagement and relevance** for its users.
* 📊 By leveraging its unique data, Pinterest has demonstrated that its AI-driven tools **significantly outperform standard models**, yielding **higher engagement rates** from its curated user interactions.

I'm assuming the better efficiency and targeting for advertisers means more repeat advertisers on your platform. Yeah, that's exactly right, Caroline. You know, we just had Pinterest presents yesterday, which is our annual marketing event for advertisers, and we saw a record turnout for that. And really at the core of that is that over the last two years, we have transformed Pinterest from a place that was just digital window shopping to a place where people are actually clicking and buying and shopping, you know, directly with retailers. And that's giving us our best product-market fit ever with users. But it's also cutting through for advertisers where we have more than double the number of clicks to advertisers year on year for three consecutive quarters. And we're bringing them great AI-driven ad tools. It's like more and more advertisers take advantage of that. You're brought on because of your expertise in commerce and payments and a whole

wealth at Google. I'm interested, Bill, as to where the clicks are being made, which products, which demographic you serve. Well, so that's a great question, Caroline, because we have really become the place that Gen Z goes to shop. So we have more than 40% of our users are Gen Z, and it's our largest, fastest-growing demographic. And Gen Z states that the number one reason they go to Pinterest is for shopping. And more than 60% of them say that they're always shopping. So when you think about the rise of Gen Z, where their buying power is just growing tremendously, in fact, over the next five years, Gen Z is predicted to bypass baby boomers in buying power. Over the next five years. And Pinterest is where Gen Z goes to shop. And so obviously a great place for advertisers to meet that really important growing audience. Bill, do you have a sense for this upcoming holiday season what the biggest

funnel for you will be, or at least who you will help the most? You and I have talked a lot about the relationship with Amazon, for example, but also some of the other names from China are becoming increasingly important for you. Yeah, so we're really broadening our reach with advertisers. So as we opened up the stores on our platform, we saw the largest, most sophisticated advertisers lean in first, which is great because they're the hardest to please, the most discerning. But what we're seeing now is that that's really widening. And with performance plus and those driven tools, it's really making it easier for a broader set of advertisers to take advantage where it gives them automated campaign creation, automated creative. And so we're seeing big advertisers win. For example, Walgreens is seeing a 55% improvement in click-through rate by using our generated backgrounds. So the products look more attractive. So you see that, you know, that shampoo

or that hand soap and what your bathroom might look like. But we're also seeing as we go down to smaller up-and-coming advertisers like Rug Eyeballs, which is a really fantastic home goods company. We are now their largest traffic source by volume and efficiency, literally driving, driving three times the clicks at half the cost. So, these AI-driven tools are really broadening out the side of advertisers on our platform. Bill, we've been thinking a lot about augmented reality. Check out my piece on Matters Orion. Will Pinterest make investments in hardware for air or partner with matter? Snap, expand what you're doing. We're not a hardware platform, but we are seeing that we have become increasingly a destination for our users. More than 80% of our usage is people coming to our mobile app directly. And that usage increasingly is, you know, more than half our users are here to shop, even more so with Gen Z.

So we think is as you look at these visual exploration journeys. This is really where Pinterest is winning that on visual exploration. Visual visual search shopping is inherently a visual journey. So these kinds of things are really where Pinterest stands out and we see users coming to us directly for that increasingly. Are you Al-Alam agnostic? What is the underlying technology driving these innovations? Yeah, great question. So, you know, air has become a core competency for us. I've talked about previously how when we moved to GP serving and in large models you have models 100 times larger than what they were two years ago, that they gave us a ten percentage point lift in relevancy of our recommendations. But the air is only as good as the signal upon which it's acting. And what we have is really unique signal where, unlike other platforms, users come to Pinterest in curator taste. How how is that handbag going to look

with that dress, with this pair of shoes? And hundreds of millions of users do that every day. And so that gives us a really unique signal, say what's a great recommendation not just for that user but for other users. So when we're training models, we're training on a completely unique signal to our platform. We actually see that when we test limbs off the shelf from major limb providers, we actually see that when that same limb is tuned on our signal, we get 300 basis points of additional engagement from our unique signal, which really makes tangible how unique our signal is relative to what these islands have elsewhere.

How Pinterest Leverages AI for Advertisers

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Pinterest's Transformation and Impact on Advertising

Pinterest has shifted from digital window shopping to a platform driving direct clicks and purchases for retailers, resulting in a record turnout for their annual marketing event.

The platform's user base now consists of over 40% Gen Z, making it their largest and fastest-growing demographic, with Gen Z citing shopping as their main reason for using Pinterest.

This growing influence of Gen Z, with their buying power set to surpass baby boomers in the next five years, makes Pinterest an ideal platform for advertisers targeting this important audience.

The platform is expanding its reach with advertisers, starting with large, sophisticated ones and now including smaller up-and-coming businesses.

AI-driven tools are automating campaign creation and creative, leading to significant improvements in click-through rates and driving traffic efficiently.

The platform has become a key destination for users, with over 80% of usage coming from the mobile app and more than half of the users shopping, particularly among Gen Z.

Pinterest's Visual Exploration and AI Innovations

Pinterest excels in visual exploration and search shopping, attracting users with its unique visual journey.

The platform's AI has become a core competency, with significantly larger models driving a 10% lift in recommendation relevancy.

Pinterest's unique user signal, focused on curating taste, sets it apart from other platforms.

The Unique Signal of User Recommendations

The platform's unique user behavior, with millions seeking outfit combinations daily, provides a distinct signal for training recommendation models.

Tuning limb providers' models on this unique signal results in a 300 basis point increase in user engagement.

This demonstrates the platform's exceptional influence compared to other providers.