← Behind the Numbers: an EMARKETER Podcast
Behind the Numbers: an EMARKETER Podcast
The Other Social Platforms—Pinterest’s AI Push, Snap’s Attention Bet, and Reddit’s Bid for Ad Dollars
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A
Foreign.
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B
It's Tuesday, September. Second minded Jasmine and listeners, welcome to behind the Numbers new market video podcast. I'm Marcus and joining me for today's conversation, we have two social media folks. Is that the right date? We're off yesterday. Yes. Hope you had good enough. Apparently I need another one. Senior analyst living in New York, Minda Smiley. Welcome.
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A
Hey, how are you, Marcus?
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Very good. Well, I'm fine, as you can see. It's a rough start. How are you?
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A
I'm doing well. Doing well.
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B
Very good. Welcome to the show. We also have VP and principal analyst. Hanging out in LA is Jasmine Emberg.
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C
Hey, Marcus. Hey, everyone.
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B
Hello there. Today's fact. So I have another one about Pittsburgh.
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C
Amazing.
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B
Well, how however, it's about sports.
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A
Oh, not my. Not my strong.
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B
Still with me? No.
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A
Here we go. Okay, we'll try.
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B
Well, it's such a. So it's a very rich sports history. So I'm wondering if I can turn you into a sports Pittsburgh sports fanatic by the end of these three facts about Pittsburgh sports. Jasmine, hockey fan, play some tennis, other sports.
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C
In terms of team sports, that's about it.
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B
That's all. Okay. Why? What individual sports? Oh, soccer.
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C
Not quite.
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B
Very nice. Well, these are about Pittsburgh teams. Number one, the Pittsburgh Steelers football team have won six Super Bowls, which is tied for the. The. The most in the NF in NFL history. Same number as the New England Patriots, which get a lot of credit because of Tom Brady and the him being the goat and all the rest of it. But Pittsburgh have the same number, which is.
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A
I actually did know that. Start with a seven, baby. Let's go.
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Hello. Okay. Steel Curtain Pittsburgh. Number two. Pittsburgh was the first city to hold the Super Bowl, World Series and Stanley cup titles all in the same year, 79 to 80.
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A
I did not know that, but that's before my time, so.
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Impressive indeed. And then lastly, this is the best one. All three major teams, Steelers Football, Penguins, Hockey and Pirates baseball, wear black and gold, making Pittsburgh the only US City where all pro teams share the same colors.
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A
Yeah, that's true. I always thought it was odd that other cities have different colors for each sport. Like, I actually think it makes a lot of sense that we're aligned in that way.
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B
What the hell's going on?
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A
I don't know.
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B
Sort that out, please.
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C
Black and gold.
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A
That's a good question. I don't know why black and gold are like the Pittsburgh colors, but. Yeah, it's very. Yeah, I'll look very consistent.
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B
I need something for next time.
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A
Next time. A third Pittsburgh fact.
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Exactly.
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C
Anyway, I'm jealous, Marcus. I haven't heard any Finland facts in a long time.
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B
I'm sorry, you had your share. I'm sorry, I can't find any. I'll keep looking. Anyway. Today's real topic, the social platforms not called Facebook, Instagram or TikTok. All right, it's time to check in on the smaller social guys, Pinterest, Snap and Reddit. Start with Pinterest. There are a few stories coming out of the Pinterest camp. 1 Jeremy Goldman writes that Pinterest gen AI tools like auto collages and performance plus helping advertisers scale creative output and improve engagement with a social platform, saying users saved AI generated collages twice as often as standard pins during testing. Number two, our Gargia Sevilla explains that over one third of Pinterest's near 600 million global users are men, 30% in the U.S. driven largely by Gen Z. Their search is spanning fitness, grooming, parenting and finance. Upend stereotypes and signal new ad opportunities. And story number three, Rachel Wolf Our Rachel Wolf notes that Pinterest is partnering with Instacart to let advertisers power their campaigns using Instacart's first party data, a move that will enhance the value of both companies ad platforms while whilst advancing Pinterest shoppable ambitions. Jasmine what's the most interesting development at Pinterest? Recent AI efforts? The shifting user demographics or partnering with Instacart?
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C
So what I think is most interesting actually is to look at all of these developments together. And so when you do that there's this really clear picture that Pinterest is really trying to deliver on its ad business on all fronts. So it's building a suite of AI driven features for both consumers and for advertisers and it's also launching really smart partnerships that speak to its differentiating factor, which has always been that people who come to Pinterest are primed for shopping. That's not necessarily the case on other social platforms. I think Pinterest has also done a really good job of positioning itself as a safe corner of the Internet and I think that's also a big reason why they released the Men's Trend Report where you got Those statistics, about 30% of its user base now being male, as well as the Pinterest manhub which helps advertisers reach those male users on the platform. That positioning of course isn't new and on its own it isn't enough to drive the kind of user and sales growth that we saw last quarter. But I think combined with these other business developments, Pinterest is in a really good place right now.
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Does one stand out more than the others for you? Minda?
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A
Yeah, I mean, I'm actually going to go completely off script here and say I think, yeah, I think their ad tech ambitions are pretty interesting. I know that's not the sexiest thing to bring up on a podcast, but they are certainly striking a lot of partnerships within the ad tech space that would really help them scale in terms of advertising. So that's certainly something to watch from a marketing perspective. But as to what you actually asked, I'm pretty aligned with Jasmine. I think the AI, you know, they certainly are rolling out AI features across all aspects of the business, continuing consumer facing, search, commerce, actual ad formats. There's a lot there. I know that AI slop was a big concern for them this year. It does seem to be something they've taken steps to address. And of course AI slop is an issue across all the platforms. And so I think that is an issue.
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C
The ad partnerships. Minda is such a good point and it's something that Jeremy called out in the article that you mentioned, Marcus too, that analysts in particular are really optimistic about these partnerships in part because it helps Pinterest to compete with much fewer overhead costs. And so it's clear, you know, some these smaller social platforms of course don't have the pockets, as deep pockets as, say, meta. And so finding more creative ways to be able to scale their businesses is crucial for them.
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B
Yeah, let's move to Snap. As you can see from this chart on the screen, if you're watching us, close to half of buy side decision makers expected their organizations to focus at least somewhat on attention metrics, according to the iab. Marissa Jones notes that Snap is looking to be a leader in a metric that advertisers are increasingly paying attention to. But on the back of a lukewarm quarter, can Snap's emphasis on attention help it bounce back? Minda? Can it?
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My take on that is I think, I think Snap's issues right now are much bigger than something like an attention metric. I mean, I think it certainly maybe could be part of how they, how they bounce back. But I think a lot of the issues plaguing them right now are a little more existential in terms of sort of where they fall within the social media mix, where they're kind of seeing some issues in terms of users. That's not to say they don't have momentum. You know, they definitely are getting ahead of a Lot of their challenges right now with, with hires in particular. I know they have a new head of sales in North America. They just promoted someone to a CMO role. So I certainly think Snap is aware of some of their issues right now. But yeah, I think it's going to take a lot more than, you know, one specific thing to help them get there.
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B
Yeah, Jasmine, it's kind of mixed signals coming out of Snap at the moment. Look at their recent earnings. Revenue growth struggling. Snap grew revenue 9% year over year in Q2, reaching 1.3 billion. It's the slowest growth in over a year. But they did point to a technical ad platform issue that briefly let it run ads at a discount. So maybe that's to blame for it. However, on the other side, engagement growth is doing well. Daily active users are up 9% year over year. It's nearly 470 million, with monthlies up over 900 million and time spent also up with Spotlight content. So what's your read on Snap and whether attention is the thing that's going to get them to be able to bounce back?
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C
I think mixed signals is a good way to put it. And you know, to mind this point, Snap really is pulling out all the stops to get advertisers to spend, but it's working against long standing, really structural issues with its business. And that includes things like its small size relative to Meta, which is its main competitor, its core use case as a, as a messaging app. And now there's also indications that Gen Alpha isn't signing up for Snapchat the way that Gen Z and Millennials did. And I think that that probably contributes to the weakness that we saw in North America. Daily active users in Q2. I know you pointed out the overall daily active user growth and monthly active user growth, which was really strong, but it actually declined in, in its core market. And I think one persistent problem for Snap has also been a lack of consistency in this really competitive market that we're in. So it's been working really hard, of course, to revamp its ad platform and there are signs that some of that work is paying off. We've seen an increase in the number of advertisers. There's also or direct response advertising has been driving a lot of its growth. But you mentioned that ad glitch that it had in Q2 and investors really were not forgiving of that. And I think that shows that you really can't make mistakes in the current environment. One other thing that we haven't talked about a lot and that I've been thinking about a lot recently is how vocal Snap has been recently about their AR spending. And so on the one hand, cumulatively spending $3 billion on AR is not a lot. I mean, Meta loses more than that on Reality Labs every quarter. But it also seems a little bit out of touch, given that we know Snap's ad business just isn't keeping pace with the rest of social media, and investors and advertisers are really looking for more innovation in AI than they are in AR right now. Now, that's not to say that Snap should abandon this. I mean, it's made AR such a core part of its strategy, and it's not the only platform or company that's working on AR initiatives. Meta is too met. But again, it has much deeper pockets and its adultness has been on a tear.
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Yeah, and because of that, it's on a much shorter leash. The company's net loss grew to over 260 million in the quarter. So whereas Meta is turning a significant profit each quarter, they just don't have the time or the money to be wasting any of these dollars. Let's move on finally to Reddit. Final social platform of the day Our Jeremy Goldman again was noting that Reddit delivered a breakout Q2 posting ad revenues close to $500 million, up over 88.0percent year over year. Global daily active uniques were up over 20% to 110 million, with US uniques up over 10%. That makes Reddit's US average revenue per user growth go up by over 60% year over year, sign of improving monetization efficiency, he writes. But Jeremy suggests that the bigger question is whether Reddit can consistently shift advertiser perception, saying that it excels at servicing high intent users and community insights, but remains under weighted in many media plans. As Jeremy inquires, can it earn a permanent seat at the table for bigger brand budgets? Jasmine if yes, why? If not, why? What is holding it back?
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C
So I want to zoom out a little bit before I answer your question, if that's okay, because I find Reddit endlessly fascinating and part of that is because it is so paradoxical. So if you think about Reddit from an advertiser perspective, it is becoming one of the strongest AI driven social ad platforms. From a consumer perspective though, it's one of the few places where you can still get real world human interaction at a time when social media feeds are being filled with creator content and AI slop and Reddit itself has positioned itself as being anti creator and anti influencer. Though not anti influence, which is something that Jim Squires, who's the EVP of business marketing and growth at Reddit, told me at Cannes earlier this summer. And Reddit of course has also leaned in really heavily into the user generated commentary and community and it's pitch to advertisers. And I say all of this because it's also not lost on me that the reason Reddit has been able to build such a strong AI foundation even with its small size in the social ad market is because of all of this human led influence that's happening on the platform. If you think about all the product discussions, the reviews and recommendations and all of that actually forms one of the most interesting ad products that it's launched recently, which is called Community Intelligence, I believe. So to your question then. I don't know that I can say for certain whether Reddit will earn a permanent seat at the table for bigger brands, but it certainly has carved out a corner of the proverbial table that I think speaks both to the advertiser demand for AI driven products as well as the consumer need for more human driven content. And that is a balancing act that I haven't really seen a lot of social platforms navigate as successfully.
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Yeah, to that point there are very unique conversations happening on Reddit as people discuss, as mentioned, things like products reviews about things. Dan Gallagher of the Journal was noting Reddit has been proving to be a more attractive draw for advertisers looking to engage. Looking for an engaged audience is often focused on commercial subjects saying such as users seeking opinions on what products to buy. Than Salmon of New street Research estimating around 4 40% 4 0% of all conversations on Reddit have commercial relevance, creating a sweet spot for the company in the consideration phase of shopping. The ask for notes Minda, can I get a seat at the table permanently?
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Yes. I think my answer would be it depends and I know that's a very annoying answer, but I do think it is a bit nuanced. I do think that they are, I think in some ways, yes. I mean advertisers are certainly more interested in Reddit than they ever have been before in my opinion. I mean anyone who knows me or has talked to me in the past year has probably heard me go on and on about Reddit. I've been particularly optimistic about about the platform. I'm sure I've talked about it on this podcast. So yeah, there's certainly momentum there. Like the vibes are good for Reddit and aside from just vibes, they're rolling out a Lot of features, a lot of products for advertisers right now, especially since they went public. But I do think when we actually talk about budgets, that it really only is one element of this conversation. I think a lot of brands are, at least right now in the short term, probably more focused on organically how they can get onto Reddit. That because it is a platform that isn't like other platforms, it's not, you know, it's not a plug and play. They might be incrementally increasing how much they're putting toward it from a budget point of view, but I think a lot of them are more, just kind of getting a little more more familiar with the platform from an organic perspective. Just try to figure out if and how they can even make their way onto it, because it is a very different beast from the other platforms. And so it'll be a little bit of a slow burn, I think.
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C
And I think you advertisers also need to be careful from the consumer perspective. Right? I mean, people on Reddit aren't as receptive to ads as they might be on other platforms just because they haven't been there in the same way they might have been on an Instagram feed or on a TikTok feedback. Not saying that consumers like ads there either, but I think as they're building out their strategies, they do need to think, you know, more critically and strategically about how they show up there. And I think that's part of what's pushing them more towards building this organic presence first before introducing paid placements.
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Exactly. I mean, one example I like to point to, and I feel like it's kind of like the go to example is, is Sonos, like Keith from. Sonos is an employee who is pretty engaged within that subreddit. People have come, come to know him and respect him over the years. And so that is just one way a company has kind of been able to, you know, crack Reddit, I guess you could say, with this employee that has just been able to gain trust within a subreddit dedicated to this company. But again, that took a long time. I don't know exactly how long he's been doing that for, but it didn't happen overnight. It wasn't one ad that kind of changed the game. So a lot of these strategies I do think are going to take a bit more time and a little bit of creativity as well.
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C
And from, from Reddit's point of view, I mean, one of the things that I've been thinking about a lot too is all of that data and information that it has on its platform. I mean, Marcus, correct me if I'm wrong, but did you say 40% of conversations on Reddit now have commercial relevance?
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Yes, according to newstreet Research. Yep.
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C
So that's not just relevant for advertisers and marketers that want to advertise on Reddit or show up on Reddit. It's relevant to their bigger marketing plans. Right. And so I think what Reddit has done really smartly, especially with community intelligence, is package that all up into a product for brands that they can use not only to inform their strategy on Reddit, but more broadly across multiple different platforms and different channels. If you're tracking kind of consumer sentiment and interest and the conversations that are happening on Reddit, I mean, that's really good way to guide how you're positioning your product product to consumers overall.
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B
Yeah, yeah. Let me throw this at you both quickly before we wrap up. So my question here is, is Reddit able to grow revenue from licensing its content to AI companies more? Because most of the company's revenues come from advertising, but its other revenue is mostly comprised of licensing deals once it struck with OpenAI and Google, which accounted for about 7% of total revenue in Q2. However, there's recent data from Semrush showing that Reddit is incredibly valuable to AI companies coming in as the clear number one most cited website by AI models, with a citation frequency of 40%. Wikipedia was a very distant second with 26%. Another recent report from search analytics company Airfs showed Reddit appearing in over 5% of Google's AI overviews responses, the most of any source. So can they lean more on licensing? Can you see it being a more even balance between licensing and advertising revenues? Is that a path for Reddit?
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C
I think it should be. I mean, one of the things that we've talked more broadly about is the fact that these smaller social platforms really do have to diversify their revenue streams. I mean, Snap, to its credit, has made really good strides with Snapchat. Plus, I think licensing for a platform like Reddit as well as X could become a viable revenue stream stream in the future if they do it right. And so, yes, I see a lot of potential there. It is really valuable information. Absolutely.
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B
Yeah. We see Reddit, even though there's potential, more potential in licensing, perhaps we do see Reddit as a billion dollar a year business in terms of ad revenue starting this year, getting close to $2 billion in ad revenue per year in just a couple of years, which is like 20 to 30% per year growth. So advertising is definitely there and growing very strongly but still very small base and maybe there's some extra dollars to be found in the licensing space assuming that these models continue to pull data from Reddit and maybe and not some of these these other sources. I think it was Wikipedia And I think YouTube was third and then some other social platforms a little further down as well. That's all we've got time for for this episode. Thank you so much to my guests. Thank you first to Minda.
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A
Yeah thank you.
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B
And of course to Jasmine.
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C
Thanks so much and thank you to.
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The whole editing crew and to everyone for listening in to behind the Numbers Remarketer video podcast. Make sure you subscribe and follow. Leave a rating and review if you have a moment please and tune tomorrow where I'll be guest hosting the Reimagining retail show as we check in on everything that's been going on with Target.