Pinterest has announced a new strategic ad partnership with Amazon, aiming to bring more relevant products and brands to the social media platform. The multi-year deal is Pinterest's first partner on third-party ads, according to a blog post the company shared, coinciding with its first-quarter earnings beat. This partnership signals a new direction for Pinterest, which has been adapting to changing interests around product discovery. The image-sharing platform recently launched its video-first Idea Pins and increased investment in creator content. However, some creator efforts were recently wound down due to Pinterest's last-quarter revenue miss, with the company warning of low first-quarter sales.
Amazon's digital ads unit, by comparison, did well in the same quarter, jumping 19% to $11.6 billion. Pinterest has been struggling with macroeconomic forces affecting its business, and has promised to adapt to the changing environment. The company also laid off 150 employees in February to reduce expenses. The new Amazon ads partnership will potentially offer consumers a more seamless buying experience. When users encounter an Amazon ad on Pinterest, they will be directed straight to Amazon to make a purchase.
Pinterest says over 463 million people come to its platform each month to create a life they love. Brands and products are crucial for this journey, enabling users to move from inspiration to action, while advertisers can connect with users with high commercial intent. Amazon SVP Paul Kotas says the company is delighted to partner with Pinterest and make it easier for customers to discover and buy relevant products. The integration of Amazon ads will take place over multiple quarters, starting later this year.
While Pinterest beat Q1 revenue and earnings, with revenue up 5% YoY to $603 million and GAAP net loss of $209 million, Pinterest stock dropped 6% on higher Q2 costs. The Amazon ads partnership will bring the potential for increased revenue, but Pinterest is not making any near-term revenue forecasts, with meaningful impact not expected until next year.