Snapchat, Pinterest and Reddit turn to AI in laying the groundwork to capture SMB ad dollars

And if their latest earnings are any indication, the bet is starting to pay off. Here are some highlights from the platforms’ earnings:

• Snapchat’s CEO Evan Spiegel highlighted that SMBs were the “largest contributor” to ad spend last year, as the company recorded $5.36 billion in total revenue, though didn’t share breakdowns.

• Pinterest announced it had generated $3.65 billion in total revenue for the year, while CEO Bill Ready attributed its 19% revenue growth in 2024 to “transforming Pinterest’s ad platform into a true lower-funnel performance engine.”
  
• And Reddit recorded $1.3 billion in total revenue for 2024, and specifically $1.2 billion of that came from ad revenue. According to COO Jen Wong, mid- and lower-funnel revenue accounted for about 60% of Reddit’s total ad revenue. She added that, across channels, the company’s scaled business, which includes mid-market and SMB advertisers, “continues to be a growth driver, as we are activating new advertisers across both the U.S. and EMEA regions, and tuning our product set to better address these performance oriented advertisers.”

Reading between the lines, these figures are the early results of the platforms’ investments into a number of AI-powered products and features throughout 2024.

Snap’s vp of global small and medium businesses Sid Malhotra told Digiday that the team had been hard at work on three foundational areas to its ad stack to enable SMBs to see better performance. These included targeting and optimizations, improving signals, building out a conversion API, and creating more unified ad formats. The platform now also offers a number of AI-powered ad tools such as automated bidding strategies, simplified onboarding and ad buying through the platform’s first automated campaign set-up recommendation tool called Personalized Templates. And that’s not all. Snap CFO Derek Andersen hinted on the earnings call about the platform’s new AI-powered smart budget optimization feature which will begin testing by the end of Q1.

“We’re also working on how AI automation can help advertisers generate creative, because we believe most small businesses struggle with finding the right creative to attach to their ads,” Malhotra said. “And so there’s a lot more work we’re doing in 2025.”

Pinterest joined Google, Meta, et al. in October 2024, when the platform launched its own AI-powered campaign tool, Performance+. Even just five weeks after launch during the app’s third quarter earnings, Ready noted that the team was already receiving positive feedback from advertisers who had started using the tool.

“This is especially true for the smaller and medium-sized advertisers who have historically struggled to build successful campaigns on Pinterest,” he said.

Reddit, which arguably had a lot to prove last year having just gone public in March, was busy laying a lot of foundational grounds. The team announced its first conversions API partner in Tealium, introduced new ad formats (such as free-form ads and dynamic product ads), and it acquired creative intelligence platform Memorable AI to enhance campaign planning and drive better performance. Reddit also introduced a number of AI-powered tools such as an ads inspiration library and an AI copywriter in beta, as well as an image auto-cropper tool.

“We’re in the early stages of exploring end-to-end automation across our performance objectives,” said Wong. “We believe this can help drive performance and lower the barrier to adoption.”

Getting to this point for these platforms has been more of a slow burn than blaze.

The big players including Google and Meta who have scale and deep pockets have been launching AI-powered tools to accommodate SMBs since 2021 — meaning that they’ve had a long head start to pioneer these tools and build a customer base of SMBs who now ultimately rely on them.

But tier-two platforms like Snap, Reddit and Pinterest have had far less resources than the tech behemoths. Instead, they’ve had to prioritize getting to a position where revenue is stable and big enough to even begin considering investments in infrastructure to make their platforms more accessible to smaller advertisers.

“The infrastructure and team you need to scoop up thousands, or millions of SMB advertisers, is very different from the team and infrastructure you need to get cozy with the holding companies,” said Max Willens, senior analyst at eMarketer.

And even then, it’s by no means a certainty that these investments will pay off. Sure, AI makes tasks far easier and more efficient for smaller advertisers, but Snapchat, Pinterest, Reddit and the like still need to make it worth their while.

As Pinterest’s Ready made the point to analysts: “When other platforms launched similar products, it kicked off multiyear adoption cycles for them,” he said. “Notably, these platforms were still iterating and enhancing those products today three to four years after their initial launch. We think about this similarly. There’s tremendous benefit yet to come and more benefit in front of us than behind us.”

The risk now is whether or not those SMBs will have become almost too reliant on Google’s Performance Max and Meta’s Advantage+, for example, to have enough wiggle room in their budgets to explore spreading those ad dollars wider into these tier-two options.

“While first mover advantage is great, it doesn’t necessarily mean that if you’re not first, you’re last,” said Shamsul Chowdhury, evp of paid social at Jellyfish. “As the smaller platforms such as Snap and Pinterest beef up their SMB offerings, it gives these advertisers an alternative to their existing Google and Meta investment.”

Which is to say that, for SMBs, while they may be more frugal with their ad dollars, choosing a platform is as simple as this: They’ll spend money if a platform drives profit for them.

“Whether SMBs venture outside their comfort zone is TBD,” Chowdhury said. “But those who are seeing their ad dollars getting less than prior years should definitely be considering the likes of these tier-two platforms, especially if they are able to map out where their Google and Meta investments are plateauing.”