Pinterest's Active Users Plummets As The Platform Loses Its Growth Momentum Gained Due To Lockdowns

Even though the pandemic has boosted eCommerce activity, it appears that at least certain areas of online purchasing are already reverting back to norm, with Pinterest's active user count plummeting again for the third time in Q4 2021.

Pinterest's monthly active user count has dropped from 478 million at the start of 2021 to 431 million presently, a drop of 47 million active users over the year.

Although 431 million active users is still a great deal, the idea that Pinterest no longer has most of its growth momentum over the last two years (Pinterest reached 416 million MAU in Q2 2020) isn't a great indicator of the users’ perspective of the app’s functionality or worth, for it wasn't able to retain these individuals on as regular users even as it delves into new areas for expansion.

Despite Pinterest not having as many users as other social media platforms, those who are regular Pinners see great value in the platform, with 90 percent of weekly active Pinners using the app to help them make purchasing decisions. That may still be the case for its most devoted users, but if Pinterest's significance isn't being passed on to new audiences, as evidenced by its retention and growth statistics, it may be missing out on the opportunity to gain a larger market share for the many brands hoping to engage their target buyers through the app.

And, as evidenced by its 'Sales and Marketing' expenditure, Pinterest has made a more coordinated attempt to secure more users and build on its growth momentum.

Pinterest realized that as physical stores reopened and COVID limitations loosened all over the globe, it would lose traction, hence it made a larger effort to optimize its potential with a new branding campaign to generate more interest.

According to user counts, this hasn't been particularly effective, which is a worrying sign for the app's future growth potential. However, its revenue figures did rise as a result of increasing interest from retail advertisers as the holiday season approached.

As seen here, the platform generated $847 million for the quarter's overall revenue, with the United States accounting for most of it. Pinterest, on the other hand, is witnessing stronger revenue growth in overseas areas, which could be a good indicator.

It's also released some impressive income per user figures, indicating that advertisers are becoming more interested in the app's user base.

However, increasing revenue per user essentially reduces advertiser interest, and if Pinterest's growth momentum continues to wane, it will find it difficult to retain these gains in the following year. Pinterest spread its in-app shopping tools to 13 international markets in 2021 (Pinterest claims user engagement with shopping surfaces in the app increased 20% YoY), and it also focused on making it relatively easy for sellers to publish their product catalogs to present their products as shoppable Pins.

Simplified onboarding is critical to bringing more products into Pinterest's ecosystem, and with Pinterest also aiming to enhance its search and discovery features, this is a critical component of the platform's development as a central eCommerce hub.

Greater matches and more possibilities are what will hopefully bring Pinners returning, and if Pinterest can increase sales for the businesses that use its listings, things will continue to head in the right direction. Pinterest also claims that its new Idea Pins – its version on Stories – and its Watch tab, which focuses more on video content, have sparked a lot of interest among users.

Pinterest is also attempting to incentivize Pin creators with its creator funding program, which will assist to bring more useful, quality material into its system and have Pinners returning. Given that Pinterest isn't specifically focused on entertainment, this appears to be a more difficult road for it to go.

Also, its most popular creators need to be active to provide more Idea Pin and Watch tab content for people to check out. However, there are also significant obstacles to overcome in terms of capitalizing on the app's potential and stopping users from moving away.

In certain respects, the previous two years' changes have been completely unforeseen, so who knows precisely what effect each consumer trend and the lockdown has on general attitude? However, if Pinterest loses all of its recent growth, it would have a major impact, particularly since other social applications have continued to thrive during this time. Is this a sign that Pinterest is losing users and attention? 430 million users is a large number, but a decrease below 400 million users, a reversion to pre-COVID levels, would be devastating.

Pinterest, on the other hand, makes the following fascinating observation:

“In addition, lower search traffic (driven by Google’s algorithm change in November) negatively impacted our MAUs on a year-over-year basis. In fact, we believe lower search traffic was the primary reason for the sequential decline in MAUs from Q3 to Q4 in both the US and international markets.”

That appears to be referring to Google's Core Update, which was released in November and could represent concerns among some search marketers that Google is now scanning less information, causing websites with a lot of changes to lose some of their SEO edges. It's difficult to assess what the overall impact on Pinterest has been, but it's evident that the upgrade has had a negative influence on Pin performance.

This is particularly intriguing when you consider that both Pinterest and Google are attempting to capitalize on shopping searches, with Google regularly updating Google Images and its visual search tools like Pinterest's. Is it possible that Google is trying to punish a future competitor, or that the update is serving as a caution to Pinterest to remain in its space and not try to steal search traffic too aggressively?

In any case, it'll be fascinating to see if Pinterest receives less referral traffic from Google in the future, and how it affects its general performance.