Pinterest made its IPO registration public last week giving investors a lot to digest before it makes its market debut next month. One of the most important pieces of information investors can take from the company's filing is a better understanding of how management thinks about the business -- and by extension, what companies it competes against.
Many people view Pinterest as a social media company that competes with Facebook (NASDAQ:FB) or Snap (NYSE:SNAP). Indeed, they're listed as Pinterest's competitors in its registration statement. At the same time, it's also a visual search engine, courting over 2 billion searches a month, putting it in direct competition with Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google -- another company on the list.
But one of the companies on Pinterest's list of competitors in its S-1 is not a social media company and it's not exactly a search company. It's Amazon (NASDAQ:AMZN) -- the everything company.
The value of Pinterest to consumers
Pinterest outlines its value propositions for both consumers and marketers in its S-1 filing.
For consumers, Pinterest offers a way to find visual inspiration and search using other visuals instead of text. Google, Amazon, and Snap -- with the help of Amazon -- allow users to search with photos as well.
Pinterest also offers human-curated collections of photos, links, products, etc. Pinterest users are able to create their own collections of "pins," which then inform the company's recommendation engine to improve its core product. Amazon is able to offer similar services based on shopper data, registries, and wish lists. It even went so far as to copy Pinterest's collections feature, but that product was short-lived.
Pinterest also says its service is "designed for action." Searching Pinterest for inspiration can be the first step people take to start a project. Pinterest put a big focus on shopping, though. "We have built features that encourage Pinners to take action on ideas they see on Pinterest, with a special focus on making it easy for people to purchase products they discover on our service," the company wrote. Amazon has a "special focus" on product purchases as well.
Social media has come under pressure for creating toxic environments, but Pinterest avoids that. Facebook's News Feed can be full of depressing news or overly political discussion/name-calling. Snapchat's Discover section has been criticized as being full of low-quality clickbait. And Instagram is where people show only their best selves and can lead users to feel worse about themselves. (Amazon also avoids the perils of social media.)
What's in it for marketers?
Management points out Pinterest's environment is better for advertisers to offer inspirational messages: "We believe that the inspirational and constructive feelings that many people experience on Pinterest make our site an especially effective environment for brands to build an emotional connection with consumers."
It also suggests the audience on Pinterest is more valuable than normal audiences on social media or search. People come to Pinterest to find inspiration for home improvement projects, new fashion styles to try, or a recipe to cook. Users are coming in open to new ideas and products. It's hard to compete with Amazon, however, where users go explicitly to buy something online.
Finally, Pinterest offers advertisers the ability to reach consumers at every part of the sales funnel -- awareness, consideration, and sales -- by nature of how people use its app. Amazon is also able to offer similar tools with banner ads, sponsored products in product listings, and special discounts at checkout.
Amazon might be Pinterest's biggest competitor
While Google and social media companies have some overlap with Pinterest's value propositions for both consumers and marketers, Amazon competes in the same arena on practically every bullet point. Amazon's larger audience and troves of data make it a significant threat to the company.
That said, when Amazon tried to copy Pinterest's products almost exactly in the past, it failed. That indicates people view Pinterest as a valuable resource and something very different from Amazon and other social media. As long as it maintains that unique place in consumers' minds, it should be able to successfully compete against much larger competitors and attract advertising dollars.