Thursday, September 19, 2013

Pinterest Will Start Showing Promoted Pin Ads To Make Good On $338M In Funding

After four years and massive growth, Pinterest is taking its first serious steps towards monetization. CEO Ben Silbermann today told users “we’re going to start experimenting with promoting certain pins from a select group of businesses” because “it’s so important that Pinterest is a service that will be here to stay.” Pinterest had previously only made a tiny amount from referral fees through SkimLinks. The initial tests of ads will be in search results and categories feeds. For example, when you search for Halloween, you might see a costume on sale at a local shop that had pinned the outfit. The format follows in the footsteps of other social advertising successes like Facebook and Twitter. Both similarly let businesses amplify the reach of their organic content by paying for “promotion”. Pinterest has taken $338 million in funding with its latest $200 million Series D led by Valiant Capital Partners, and joined by Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital. In 2011 and 2012 Pinterest worked with analytics company SkimLinks to track traffic it was driving to ecommerce sites and earn small referral fees. Despite rumors it was earning significant revenue from the partnership, we heard the income was relatively small. Pinterest stopped working SkimLinks awhile back, lending credence to the idea that referral fees weren’t enough to support the company long-term. Until now its true focus had been growing its user base, which comScore pegs at 46.9 million monthly uniques worldwide as of July. Now it’s time for it to become a real business. The Pinterest Ads Game Plan Advertisers won’t pay for the ads at first. Pinterest wants to make sure the ads work well first and deliver value to advertisers without disturbing users. To that end Silbermann defused fears, writing “I know some of you may be thinking, ‘Oh great…here come the banner ads.’ But we’re determined to not let that happen.” Specifically, he lays out that the ads will be: Tasteful—No flashy banners or pop-up ads. Transparent—We’ll always let you know if someone paid for what you see, or where you see it. Relevant—These pins should be about stuff you’re actually interested in, like a delicious recipe, or a jacket that’s your style. Improved based on your feedback—Keep letting us know what you think, and we’ll keep working to make things better. Along with building out a sales team, Pinterest will need to do exhaustive measurement to find the right balance of ads and organic content that earns revenue but doesn’t scare users away. Expect it to err on the conservative side at first. If it follows the Facebook and Twitter playbook, Pinterst will first hold the hands of big advertisers as the run experimental campaigns. It would then enlarge the private beta of managed sales advertising to encompass more brands. Next it would look to create a self-serve tool open to all businesses wishing to advertise. Meanwhile it would set up an ads API that would let big brands and developers build tools for running huge, efficient ad campaigns efficiently. Nesting As A Business Pinterest is one of many Silicon Valley startups hoping to gain traction first and figure out monetization later. Most never achieve the former and fold before they get to the latter. But Pinterest found a place in the hearts, bookmarks, and home screens of many by translating our collecting and nesting instincts to the digital world. You might never be able to afford that dress, that car, or that vacation home, but there’s satisfaction in simply saying “this defines me”. Now it just needs to convince advertisers of the value of a spot in our homes of 1s and 0s.

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