In June 2016, Pinterest introduced buyable pins on the web and a shopping bag, an addition to the Pinterest Shop section of its mobile app. The users now have more opportunities to shop multiple items they tagged as being pretty or just something they aspired to own. The Pinterest Shop is available on both iOS and Android devices. In addition to offering curated picks of the day, the app is designed to allow individual stores (including big names like Bloomingdales) and small-scale vendors to add their own online storefronts.

Despite all these changes, Pinterest's fundamental business model has not changed much since its 2010 launch. They are growing through cultivating a user base devoted to three central tenets: discover, pin, and buy. 

Most importantly, the website has managed to reach 150 million monthly active users, 50% up year over year, according to VentureBeat. Consequently, companies can be confident that their advertisements will have a progressive impact. Unlike other social platforms, Pinterest actually caters to people who want more stuff.

For What It’s Worth

Because users are actually looking for new products, advertising is allowed to be a welcome and central feature of the Pinterest experience. Moreover, it is in the interest of companies to make their ads look as good as possible, because users like to make their boards as esthetically and substantively pleasing as they can.

This is an advantage for marketers, because they want to make their product look as appealing as possible anyway. Pinterest allows companies to market in a way that appeals to users who want to display their interests in the best light.

There is a synergy between Pinterest advertisers and users. In this sense, Pinterest users are actually advertising for them. If you advertise ‘well’ on Pinterest, you get a compounded result: a number of repins for the price of one pin. Pinterest calls the sponsored content “Promoted Pins.”

These pins are especially charming because they appear visually similar to the user-generated pins that surround them. This assimilation may encourage sponsors to spruce up the websites their Promoted Pins lead to.

Originally, Pinterest did not charge advertisers to post their pins in order to draw customers and entice investors. This strategy has been a major component of Pinterest’s astronomical valuation.

Nevertheless, Pinterest has yet to draw major revenue. In order to remedy that situation, Pinterest has changed how users interact with the site, introducing a guided search function and removing links to third-party marketing networks. Additionally, Pinterest was purportedly planning a "buy" button for their page that will allow users to buy products without leaving the site – and will allow Pinterest to charge a fee.

Quarter Pint

Although Pinterest may not have much actual income, one thing is clear: valuation has little to do with revenue. The same phenomenon has been occured with other social platforms like SnapChat, with an astounding valuation around $25 billion.

A large part of what drives valuation is an exposition of potential. That’s really what Pinterest is: a global exposition of concepts and curiosity. Approximately 75% of the traffic from monthly active users is from mobile use in applications. This means a lot of users will be exposed to Pinterest through a mobile experience. The mobile website has been renovated to share code with the native app and website version. Making the different versions of Pinterest more compatible means advertisers will have to build presentation that accommodates those on the move in addition to anyone else at home.

Therefore, it is in Pinterest’s interest to be selective about their sponsored pins––they benefit from having attractive ads that are in keeping with the site's pleasing look. This would fall in step with Pinterest’s stated goal of making Promoted Pins “tasteful, transparent, relevant, and improved.”

The Bottom Line

Social media has become a large element of how much brands spend in annual advertising, and advertisers may benefit from being part of Pinterest. The service allows ads to mesh with users’ interests organically, whereas elsewhere promotion is often forced or wedged into our lives out of context. Companies get even more returns for their investments because they have access to user data and can see how many repins their products accumulate. 

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