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Pinterest pins revenue plans on ad targeting

Matt Kapko | June 2, 2014
The digital pin-board of choice for more than 70 million users made two significant steps on the advertising front in as many weeks. With an expanded test of ad products and targeting now underway, you can expect to see more ads as the company aims at online marketers.

Pinterest lays claim to a trio of unique traits that no other social platform can. The visual storytelling, mobile-forward platform embraced largely by women is elevating those strengths as it goes through the natural progressions that every social company encounters once it reaches scale.

Pinterest has made tremendous strides in growth, usage and versatility as it reshapes its platform for the next phase. And because its usage skews more heavily toward women than any other social platform — about four out of every five users are female — Pinterest has the attention of one of the most coveted demographics in all of marketing.

At least one-third of all women in the U.S. were using the platform by the end of 2013, according to Pew Research. U.S. males are slowly warming to Pinterest, but usage is still in the single digits having jumped from 5 percent to 8 percent last year.

If the company decides to go public, as it's increasingly expected to do, investors will cling to those numbers knowing that advertisers won't hesitate to invest in the pursuit of those users whom some refer to as the chief household officer.

That decision-making power combined with rapid growth in 2013 helps explain why Pinterest enjoys a current valuation of $3.8 billion and has secured $564 million in funding from venture capitalists to date.

First Come the Users, Then Comes the Revenue

But Pinterest must hit its publicly stated goal to generate revenue this year before any IPO plans come to fruition. And so, without fail, the inevitable shift to advertising is now well underway.

It's too early to tell how quickly Pinterest will be able to concoct the right cocktail for ads on its platform, but over the past couple weeks it has expanded tests on both sides of the equation — ad products and targeting.

Pinterest's paid product it calls " Promoted Pins" is now being used by brands like ABC Family, Expedia, Kraft and Target in the search and category feeds. Ads like these could generate up to $500 million for Pinterest in 2016, according to some analyst estimates.

The company is also making some of its data available to a select group of ad tech firms to help businesses gain insights beyond those provided by Pinterest. By providing these companies automated access to its API, Pinterest is encouraging developers to add more important features like conversion tracking.

Opening the Spigot on User Behavior

"Many businesses use Pinterest to learn about their customers. You might want to learn which of your products are popular, what types of images work best or which pins are driving the most engagement and sales& Insights help businesses engage better with pinners. This could be which boards and pins are getting the most engagement, which downstream actions pins are driving or what products are most popular with pinners," the company says in a statement.

 

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