How Pinterest Will Use Its Popularity to Generate Revenue?


A few days back Shareaholic released a report that shows referral traffic from Pinterest is up by over 54% in the past year and that its referral traffic is next to none but Facebook.

This report is prepared after careful evaluation of 13 months of data (Sept 2012 – Sept 2013) aggregating traffic source referrals from more than 200k publishers that reach over 250MM unique monthly visitors at present.

Social Media Traffic Trends

As a visual social networking tool, Pinterest has grown immensely in the past two years and with the increase in popularity, the social sharing site also has grabbed the attention of the investors.

Pinterest has recently raised an investment of $ 225 million that gives the site a $ 3.8 billion valuation. In February,   the company also raised a $ 200 million investment. So precisely, Pinterest has raised $ 425 million investment in this year alone (total amount of investment is $ 563 million).

Pinterest has got a new investor, Fidelity who joined the existing investors, – Andreessen Horowitz, FirstMark Capital, Bessemer Venture Partners, and Valiant Capital Partners.

However, according to Kara Swisher and Liz Gannes at AllThingsD, Rakuten – a Japanese e-commerce giant and former investor of Pinterest (invested $ 100 million in May, 2012), did not show interest in reinvesting in the site.

Pinterest plans to use the new $ 225 million in:

  • International expansion
  • Investment in mobile technology
  • Advertising and other income-producing programs
  • Technical infrastructure
  • Acquisitions of both talent and technology

In this light, the most pressing question is how Pinterest will use its popularity to generate sufficient revenue to validate its $ 3.8 billion valuation, especially when its advertising strategies are not fully tried and tested?

That’s a good question, you see and we have some clue about the answer as well.  There are two promising advertising programs that might do wonders for Pinterest.

On October 9, 2013, Pinterest rolled out its first advertising attempt called “Promoting pins“.  These basically are paid ads that will be featured in the search results as well as category feed.

Pinterest Promoting pins

In other words,  promoted pins are, as Pinterest puts it, ”like regular pins, only they have a special ‘promoted’ label, along with a link to learn more about what that means” It’s tasteful, transparent and relevant. The site also promised to improve the promoted pins as per user feedbacks.

However, it is too early to tell whether this new advertising effort from Pinterest will be successful or not.

Apart from that Pinterest can also create some sort of affiliate model. If you look at the amount of referral traffic that the site generates, you will agree with me that an affiliate model can be a big revenue booster for the site.  Pinterest can earn money every time a user visits a site via Pinterest and makes a purchase (Pay for Performance Advertising model).

However, Pinterest is yet to roll out any affiliate program. Will it consider an affiliate model in the future? Only time can tell.

In my opinion, Pinterest can also try a few other modes of revenue generation –

  • It can strike a deal with Google and display image ads on the site.
  • It can also create an in-image advertising platform like GumGum for itself and use it for advertising program.

Both the ways can prove to be a huge revenue earner for Pinterest.

What the users are saying about the advertising programs of Pinterest?

The promoted pins have got mixed reviews from the users.  While the general users are a bit disappointed about the way promoted pins are sabotaging their Pinterest experience, the business users are quite excited about the possibility.

Will this advertising program win them over or will it bite the dust?  What’s going to be the next revenue generating move from Pinterest? We’ll see!

Do you have a revenue-generation idea for Pinterest? Please feel free to share here.