Like Snapchat, 2016 is expected to be a big year for Pinterest. The site has now built up a base of 100 million return users, and is one of the most valuable private companies in tech worth an estimated $11 billion.
Investor documents seen by the Wall Street Journal reportedly stated that Pinterest made $25 million in revenue during 2014. The same documents also contained forecasts of $2.8 billion in revenue by 2018 and a user base of 329 million. According to Kelly Coleman of Assertive Media, Pinterest now the second top traffic referrer to all websites has with only Facebook in front, generates more traffic referrals than Twitter, Google Plus, Reddit, StumbleUpon, LinkedIn and YouTube. Pinterest is also the most mobile social network driving 64 percent of its traffic from mobile browsers.
These are ambitious predictions considering Pinterest didn’t even start bringing in substantial income until 2014. The catalyst for this surge in revenue? The launch of “promoted by pins,” Pinterest’s advertising product. Initially, only select companies were invited to participate, but this month all US businesses will now be able to buy ad space on the social network.
The act of discovery and our innate human sense of curiosity has been central to Pinterest’s rise and success. In order to build up that vast base of returning users, Pinterest had to engage its audience and give them a reason to keep coming back. The way Pinterest did that was by making itself a place to find new content – whether it be music, art, technology, tv, films, news, design inspiration or consumer products.
So the strategy was clear, but dreaming something up is one thing. Making it happen is another – how could that aspiration be converted into reality?
Pinterest is a visually-oriented site. This meant in order to help users discover content that would interest them as individuals, a technology would be required that could understand exactly what people were pinning. A technology that could then make accurate predictions and suggestions of what would appeal to certain people.
In 2013, Pinterest launched “rich pins,” which automatically pull metadata, such as information like product pricing and availability, into the pins’ description. Then in 2014 Pinterest bought a startup called Icebergs, acquiring the companies technology – computer vision capabilities – in the process.
The technology enhanced Pinterest’s capacity to “see” the subjects of pinned images and make recommendations based on them, and sure enough within months, new features were introduced. Guided search launched helping users narrow down queries, then the ‘i-search’ bar and then an enhancement which enabled Pinterest to identify products in pinned images, even if they weren’t prominent in a photo.
Mid 2015 the company introduced buyable pins, pinned products with a buy button, that made it possible for users to purchase things they found on Pinterest. There are now more than 60 million buyable pins, all of which can be found through Pinterest’s discovery algorithms. And in the near future search filters will allow users to sort their searches based on price and color.
But in a surprise move, Pinterest choose not to monetize the buy function. The company Opted to waive any charge or cut of purchases made with buyable pins. Speaking to Quartz, Michael Yamartino said Pinterest hoped that buyable pins would ultimately drive its advertising streams. With merchants eager to convert Pinterest users into customers, Yamartino said Pinterest believed merchants would be motivated to advertise and get their products targeted at the right pinners as they use Pinterest’s discovery technology.
With such a vast base, the 2nd highest referrer of traffic on the web and a clear, focussed strategy on advertising revenues, it is hard to see where things could go wrong for Pinterest in 2016.
[AP Photo/Jeff Chiu]