Pinterest is exploring new ways to make money from the huge audience that it’s amassed over the last few years. That includes new “Promoted Pins” from large national brands, but now it will also include paid placement for small and medium-sized businesses as well, with a new self-serve product it’s announcing today.
Pinterest announced in April that it had topped 30 billion pins shared by its users, with half of those being shared in the previous six months. Now that it’s reached critical mass, it’s looking to make money from those pins.
Last month, Pinterest introduced a small test of its Promoted Pins product with a group of brands that included ABC Family, Banana Republic, Expedia, GAP, General Mills, Kraft, Lululemon, Nestle, Old Navy, Target, Walt Disney Parks and Resorts, and Ziploc.
Those companies were looking to reach a highly engaged audience and create a stronger affinity with their brands and products. As a result, the first group of Promoted Pins were sold on a CPM basis, based on the number of impressions the platform generated for those brand advertisers.
But Pinterest also wants to makes its ads product available to businesses that don’t necessarily fall into the category of “premium CPM advertisers,” so it’s testing out a new self-serve performance-based offering.
Pinterest’s new Promoted Pins product will enable its partners to only pay the company if users actually click through and view the content they’re promoting. In that way, Pinterest’s those ads aren’t that different from conversion-based links that might appear alongside Google’s search results, or performance-based display ads sold on a cost-per-click basis.
For Pinterest, that could open up its ads product to a much larger potential group of customers, as the cost-per-click model could be used to drive conversions for a wide range of small and medium-sized businesses looking to gain more views on the platform.
Just as Google’s AdWords platform enables virtually anyone to bid and have their ads featured alongside search results, Pinterest’s new do-it-yourself platform for Promoted Pins will have an auction-based component for allowing business users to place their ads alongside certain categories and search terms.
Pinterest still needs to figure out the optimal mix of Promoted Pins to content shared by other Pinners in a user’s feed. And it hopes to make sure that users will want to click on Promoted Pins that do show up in their feeds.
As a result, the company is providing tools and working closely with its new partners to optimize the experience for users. According to Don Faul, Head of Operations at Pinterest, each Promoted Pin today is being reviewed by a member of the team to ensure that it meets community guidelines and that the quality is high.
Just as it did with its large brand partners, Pinterest is working with just a handful of small businesses for the launch of its self-serve offering. That includes companies like custom prints business Artifact Uprising, home cooks content and commerce destination Food52, and clothing brand Vineyard Vines. But the company expects to gradually make the self-serve offering more widely available to small and medium-sized businesses that want to test out the ads platform.
That ramp-up in the company’s monetization comes just as it’s raised a big new $200 million round of funding valuing it at $5 billion. That round was led by SV Angel, and included participation from a number of existing investors, including Bessemer Venture Partners, Fidelity, A16Z, FirstMark Capital, and Valiant Capital Partners.
Ultimately, Pinterest will need to begin justifying that valuation by translating its highly engaged audience into one that’s also highly monetized.