Pinterest the online pinboard network, has announced its first type of paid advertising, to be called “promoted pins”. This is the first ad initiative of the image sharing site since it launched over three years ago. It is assumed that the company is coming under pressure to find a revenue model. It has been heavily funded by investors, who have put $338 million into the start-up, and the company is currently valued at $2.5 billion. Perhaps it is time for Pinterest to justify their valuation.
Pinterest has shown a very healthy growth period in the last few years, however there are still some users out there that don’t understand the power of the network, compared to other social networks. Some users believe it is little more than a site for people to collect pictures of things, without provoking any action. Maybe this move into monetisation will let Pinterest prove it’s worth.
The site is responsible for a huge percentage of referral clicks, ie where users are sent to the source of a product, and actually make a purchase. So much so, that the company recently tried this as a monetisation technique, secretly adding affiliate links on the website through a partner, Skimlinks. However, the affiliate links were removed after the company came under scrutiny for not being open and transparent.
Users are concerned that the new form of advertising will impede on their user experience. However Pinterest CEO, Ben Silbermann, has assured the public that they are determined to avoid using banner ads. Instead the promoted pins will be borrow from the Facebook and Twitter style of advertising where companies will be able to promote their pin in a search. It will also be very easy to differentiate promoted pins from regular user pins. Silbermann gave the example of a search for “Halloween” returning pins from a promoted costume shop such as a Darth Vader costume.
Since the launch in 2010, the site has been working to strengthen its appeal to potential advertisers. They initially added the ability to add a price banner to any pin, including the price in the description, and more recently, introduced analytics functionality to help users to track the performance of their campaigns. It is clear that their current focus is to find a sustainable revenue model.
Pinterest is only exploring the use of the promoted pins with select businesses for now, but it is expected to be rolled out more widely in the near future.