Pinterest, now valued by some of its investors at $10 billion, is working hard to build up advertising revenue like larger public peers Facebook and Twitter.
On Tuesday, the social networking company announced a trio of efforts designed to woo new accounts and keep up with its peers. It introduced a new mobile-friendly, animated ad format it calls Cinematic Pins; an improved way for advertisers to target Pinners; and an in-house agency and insights team to create Pins for large brands.
A year ago, Pinterest launched Promoted Pins, its name for targeted ads that resemble the user-generated posts (that is, "pins") that make up the bulk of the content found in a user's Pinterest feed and searches. Promoted Pins are similar in some ways to the ads found in a user's News Feed on Facebook.
It remains unclear if the ad revenue from Promoted Pins is significant—the company won't say—but early reports from last year’s Promoted Pins launch suggest that Pinterest was asking advertisers for $1 million to $2 million in spending commitments around the launch of its ads business. At the time, Pinterest was looking for $30 to $40 CPMs, or cost per thousand impressions ("cost per mille"), a standard industry metric.
That's high, says Nate Elliot, analyst at Forrester Research. The reason for the markup? Pinterest users come with strong buying intent, Elliot says. He anticipates that the company will find balance on ad pricing in the future.
Nonetheless brands such as Gap, Target, Old Navy, Kraft, General Mills, and Expedia all flocked to the platform to evaluate whether it could deliver on a different, presumably improved kind of ad engagement with consumers.
"We're in love with Pinterest's potential," says Elliot. But, he explains, Pinterest may have rolled out its advertising products too early because the company still didn't have advanced targeting capabilities.
With the addition of an in-house creative agency, and new, more in-depth, ad targeting, it’s clear Pinterest no longer wants to be a mere experiment in brands' social advertising budgets.
Some 80% of Pinterest's users use the service on a mobile device. Pinterest believes ad formats that adapt to smaller screens will increase engagement with Pins. Cinematic Pins are motion-based Pins triggered by a user's scrolling. When a user scrolls through a feed that includes a Cinematic ad Pin, the image will begin to move similar to a video. When the user stops scrolling, the image stops moving.
Launch partners for the format include Banana Republic, Gap, L'Oreal USA (L'Oreal Paris, Maybelline and Garnier), Nestlé (Outshine, Buitoni, Dreyer's), Old Navy, STX Entertainment (The film The Gift), Target, Unilever (Suave), Visa, Walgreens, and Wendy's. It's an improvement over auto-play ads, which can be intrusive for the viewer, explains Tim Kendall, Pinterest's newly appointed head of monetization.
On Tuesday the company also introduced a scheme to charge brands to place app downloads within Pins. Pinterest introduced these so-called app-install Pins earlier this year, which allow a user to install an iOS app, for example, by engaging with a Pinterest Pin. Brands can run Pinterest ads with an app install button and pay each time a consumer downloads their app.
Motion-based Pins and app-downloads in ads are both representative of Pinterest's move to create more mobile-friendly ad formats.
The supposed advantage to using social sites like Facebook and Pinterest for advertising is that there is plenty of data derived from micro engagements—Facebook's Likes, Pinterest's Pins—that can be used to help advertisers target users more effectively. Previously Pinterest provided 30 categories for brands to target, such as food and drink, travel, or fashion. Its new efforts offer a granular approach more on par with its competition. B rands can now target Pins to users based on interests, personas or life stages like millennials, foodies and travelers. Additionally, marketers can target more carefully for Promoted Pins. A brand can opt to only pay when a user repins a Pin, for example, as opposed to when a user merely clicks on a Pin.
Pinterest has been working to build more relationships with brands and agencies with hope that they will evangelize its ad platform. It's also working to train large advertisers in best practices around creating effective ad campaigns. It's not a new approach—Facebook and Twitter worked closely with large bands when both rolled out advertising on their platforms—but it's a necessary step.
Two years ago, Pinterest recruited head of ad and brand strategy Kevin Knight from Facebook's New York City office. There, he was part of Facebook's Creative Shop, which employs a massive team of marketers to help with advertising campaigns. At Pinterest, Knight works with big brand advertisers to help maximize user engagement with their Pins and create successful campaigns through workshops held so far with more than a dozen brands and agencies.
What Pinterest is doing around advertiser education, Knight explains, is slightly different than efforts by its peers. Pinterest is working with both agencies and brands, for one. And its workshops focus less on selling Pinterest's services to ad executives and more on educating the employees who are actually creating and tracking a brand's Promoted Pins.
“In creative workshops, it’s hard to see the difference between Target and Pinterest employees at table because it’s so collaborative,” says Kristi Argyilan, Target’s senior vice president of media and guest engagement. “When we do these workshops with Pinterest we feel we are really solving problems and answering questions.”
For example, Argyilan says that through one of the workshops, the team learned to start tracking interest. Recently, Target saw that Pinterest users were actually repinning swimwear earlier than the retail giant had anticipated for the summer season. In response, the company chose to start marketing its swim line on the platform earlier.
“We don’t see advertising on Pinterest as an experiment,” she adds.
Pinterest says advertisers who go through the workshops see a 50% increase in the performance of Pins, which measures engagement by repin rates.
The final pillar in Pinterest's latest group of brand hand-holding efforts is its "Pin Factory." The company will play host to marketers and advertising executives and help them create Pins for brands who spend a minimum ad amount on Pinterest, though the company declined to reveal what that figure is. Beyond the creation of Pins for advertisers, the Pin Factory will also provide its customers with more sophisticated performance and engagement analytics for Promoted Pins.
Creating ads for brands isn’t a new strategy, either. Google and Facebook both have in-house agencies that work with brands. Pinterest also holds what it calls "Pinstitutes," several-day events held in San Francisco and New York to help educate executives from large brands (Gap, Target) as well as agencies. At these events, Pinterest execs also share best practices, and tease new ad formats and services as well.
Despite all of Pinterest's efforts to woo advertisers, much of the site's success will depend on whether brands can derive meaningful value, and dollars, from advertising on the site. Commerce, and the ability to buy within a Pin, could be an efficient way in which brands could measure success and engagement. Old Navy's Taylor Bux expressed an interest in the ability for a consumer to satisfy the "instant gratification" on social platforms like Pinterest and Instagram.
Buying within a Pinterest ad could be on the near horizon. There have been reports that Pinterest will be debuting a "Buy" button as soon as this year. Google reportedly will be placing “Buy” buttons on mobile search ads imminently.
But Forrester's Elliot cautions that the buy button is a "shiny object."
"The magic of what Pinterest can do," he says, "is in its data."