Founded in 2010, Pinterest is a US-based social media platform where users can share their pictures or blog posts on their accounts with other users. Pinterest “boards” act as a database where images and blog posts can be pinned, categorized, and stored. The social platform announced before the 2020 holiday shopping season that key features designed to boost shopping and improve user experiences and ad monetization had been added to the platform.

Both Pinners and advertisers now have shopping tools to provide a more specific ad experience, and Pinners began seeing ads in their search results offering specific and relevant online shops for their holiday presents. 

According to Investopedia, the Initial Public Offering (IPO) of Pinterest significantly increased from $1.4 billion to $12.7 billion in 2019. This is a result of the constant presence of ads on Pinterest’s main three features, namely Pinterest Lens, the shop tab search, and shopping on Pins. 

 

Pinterest’s New Monetization Feature

Pinterest has created the ability to monetize pins through its unique pin system. The platform has incorporated a ‘buy it’ button to allow Pinners to purchase the product on Pinterest itself instead of visiting the merchant site.

Pillar eCommerce brands such as BigCommerce, Shopify, and Salesforce are capitalizing on this opportunity to collaborate with Pinterest. Feedough, a top-rated website that covers startups, stated that Pinterest has not integrated an advertising and transactional fee for purchasing on the platform. The purpose of this feature was to improve user experience by providing more reasons for people to use the platform. Financial service software companies like Stripe and Braintree have designed contracts with Pinterest to allow users to use their payment services as a gateway for their purchases. 

Promoted Pins are the primary sources of revenue for Pinterest. They were paid advertisement pins from sponsors to camouflage their marketing purpose but were still distinct from other user-generated content. Users were targeted according to their interests and searchers to highlight companies’ chances of making more sales. Promoted Pins were found on the user dashboard and search results that redirected visitors to the merchant’s website. The reach of promoted pins depends heavily on the monetary investment and the demographic of their targeted buyers. 

 

The Unique Monetization Strategy Of Pinterest

Like other social media platforms, Pinterest’s revenue comes from selling advertisements to brands and companies who want to sell their products and services and improve their online presence. In 2018, Pinterest’s earned more than $755 million from advertising revenue. The platform has developed an advertising revenue model to enhance its advertisements towards users, and it’s somewhat unique in the social media space.

As a social media business, the platform has included vital metric terms we often see on other apps, such as MAUs (monthly active users) and ARPU (Average Revenue Per User). MAUs are logged-in users that must have visited the platform at least once in the past 30 days. The ARPU is the efficiency of Pinterest monetization on its user base. According to FourWeekMBA reports, Pinterest ARPU has plenty of room to grow its brand as compared to rivals like Facebook.

For more than a decade, Pinterest’s management has taken a more cautious approach to its expansion than its competitors. Since the company went public, both its revenue and net losses have increased. Therefore, this new monetization strategy includes a significant opportunity to expand into international markets, since Pinterest’s presence is still limited there.

Pinterest increases its revenue via advertising, particularly on promoted pins. As described above, promoted pins are designed to camouflage ads as user-generated pins. Besides, brands and influencers can greatly benefit from the inbound links for their affiliated marketing as the link brings users to the source of the image.

The company is also planning on implementing videos and increase ad capability along with its eCommerce features to propel its revenue growth. Also, Pinterest’s built-in shopping tool enables users to convert to buyers much faster and easier. Both brands and bloggers can incorporate Pinterest into their website and other social media platforms to increase diverted traffic to their products and services. 

 

Pinterest Value Proposition

The Pinterest value proposition can be divided into two parts; Pinners and advertisers.

Pinners are compelled to keep using the platform as their source of inspiration for products and crafts. The company’s value proposition spans four key elements designed to help the platform stand out from other social media giants like Facebook and Instagram. While most social platforms use algorithms and automatic text content generation to target their audience, Pinterest maximizes its visual experience and personalization. By focusing on visual discovery, the uniqueness of the social media platform provides a constant stream of traffic.

While Pinterest is not the only platform to drive visual content, its core human customization certainly makes it stand out from the crowd. People can handpick their pins, then save and organize them on their boards. No other social media giants have a personalization section that is quite as extensive as Pinterest. Moreover, Pinterest claims that the rate of cyberbullying and cyberhate is much lower than what has been seen on other platforms. 

For advertisers, Pinterest highlights its holistic environment, valuable audience, and adventures of self-discovery. The platform claims that it enables brands and advertisers to achieve their marketing process from creating awareness to converting users into loyal buyers. Companies and retailers can build and increase their social media presence among Pinners, boosting their online traffic and increasing sales. Their value proposition for advertisers is now reaching both small and high-volume eCommerce brands. 

 

Adapting The Digital Advertising Target Market

When Pinterest first introduced its advertising features, the platform focused largely on large international companies with massive marketing budgets. However, now that Pinterest has become a go-to source for inspiration, the company has adapted its sales advertising features to also accommodate smaller brands and businesses. Through their new digital advertising market, the platform saw a soaring increase in its revenue rate. With Pinterest able to achieve its milestone, the platform is pouring all of its efforts and resources into the international digital advertising market. 

Since Pinterest is now playing in the same league of giant technological cornerstones like Google and Facebook, the company must aim to provide features that its competitors cannot offer. Pinterest’s targeted market includes brand awareness and advertising based on the performance of the companies. The ad formats are Online Advertising, Offline advertising, and Online Performance Advertising.

Online Advertising is most suited for companies who are aiming to raise their brand awareness among top eCommerce businesses. In contrast, Offline advertising is targeted to eCommerce platforms who usually offer offline advertising while Pinterest pulls part of its marketing on its platform. The final category is Online Performance Advertising, which is primarily based on the conversion of the Pinterest metric system of ARPU and MAU, which calculates the fees based on the performance of the company’s ads. 

 

An Attractive Opportunity For Influencer Marketing

The juxtaposition of branded content and User-Generated Content (UGC) gave birth to a group of influencers who are bridging the gap between retailers and shoppers. As a result, Pinterest influencers are now using affiliate marketing to refer products and services to other Pinners. With a cross-generational appeal, Pinterest has Gen-Zers, Millennials, and Boomers browsing its platform. In turn, the platform is a gold mine for brands and retailers to tap into. In fact, the Q4 2020 Shareholder Report for Pinterest stated that their monthly international users skyrocketed, increasing by 46%. That translates to an additional 361 million users each month.

In the US alone, 98 million monthly users were active on the platform in Q4 of 2020. This figure is alluring for both brands and influencers. Pinterest’s algorithm now favors new pins over repinning, resulting in more recent content being displayed to users. A pinner’s home feed will now be a mix of content from the other pinners they follow, thanks to the change in the algorithm. Influencers are thus incentivized to constantly create high-quality content in order to compel users to pin their content.

Users often browse the platform to find new products and ideas, thus making them more prone to make purchasing decisions directly in-app. Moreover, Pinterest is extremely customizable and naturally integrates product ideas and promoted pins without a typical ad display. Many influencers are now incorporating affiliated links in their pins for users to replicate or obtain the exact product that they have used.

 

Increased Popularity In The Social Media Space

With the new eCommerce features installed on the platform, Pinterest’s popularity is skyrocketing among influencers. Several Instagrammers have begun expanding their brand to Pinterest while providing affiliated links and Buyable Pins to their audience. One example is Lydia Millen, a famous UK YouTuber and Instagrammer with more than 1.5 million subscribers and 981.4k followers on Instagram. She has recently converted her brand to Pinterest and promotes her accounts on other social media platforms to encourage her audience to buy affiliated products on Pinterest. 

Moreover, according to The Motley Fool, Pinterest’s popularity is driving its stocks to $1.7 billion annual revenue from its US-based users. In fact, according to shareholders, the stock value has more than tripled during the past year and is expected to keep increasing in the future. Users demographic has increased by up to 37% over the last 12 months, much faster growth than what was expected. With its mission to inspire its users to design their dream lifestyle, Pinterest has once again proven that its future in the social media space is very bright.

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