An Inside Look at Pinterest's Business Model

Founded in 2010, Pinterest (PINS) is a San Francisco-based technology company that is best known for its pinboard-style photo-sharing website. Users leverage the platform to create and manage theme-based photo collections of hobbies, events, or any other interests.

Pinterest went public through an initial public offering in April 2019. The stock trades on the New York Stock Exchange under the symbol PINS.

A Unique Way to Share Photos

The rise of social sharing has been meteoric, highlighted by the $1 billion acquisition of Instagram by Meta, the parent company of Facebook, and the continued success of its rival Snapchat. Advances in digital photography are certainly one reason for the increased social sharing.

Pinterest has a unique business model that differentiates it from other photo-sharing websites. Rather than having users share photos directly with friends, users curate personal pinboards of existing photos that have been uploaded by friends, strangers, and companies. Users can also upload their own photos and pin them to their online portfolios, known as pinboards.

Registered users can upload, save, sort, and manage images and other media content such as videos. This creates a personal experience for users while allowing their friends to see what they're up to by checking out their personal pinboards.

The company views itself as a "visual discovery engine," and it helps its users plan for the future by allowing them to curate images or a set of images. One of the top demographic groups of Pinterest users is women planning their weddings.

Updates and Improvements to Advertising Strategy

The Pinterest business plan monetizes the platform with advertisements. However, the company does that in a unique way, too.

Pinterest charges advertisers for engagements or actions. An advertiser only pays when a user engages with a promoted pin, which has the potential to increase the advertiser's return on investment.

Pinterest also offers the more conventional cost-per-click (CPC) and cost-per-thousand (CPM) options for advertisers.

In addition, advertisers can target users based on their interests, personas, or life stages. Doing so allows advertisers to target potential customers on a more granular level, which can boost the positive return on investment (ROI) of advertising budgets.

Pinterest has also introduced an in-house creative studio, the Pin Factory, which helps advertisers create more appealing promoted pins.

The Bottom Line

Most social sharing sites focus on interactions between friends, but Pinterest focuses on helping its users to discover new and interesting things.

Pinterest can be seen as a search engine rather than a social sharing site. Its design encourages users to stumble on new information rather than look for specific pieces of information. This focus on discovery is highlighted by Pinterest's partnership with Apple, which encourages users to discover new apps in the Apple app store.