There was nothing special about the verb ‘pin’ before Pinterest was founded in 2010. Today, online, it's most likely to be used to refer to someone 'pinning' their favorite photos on the social network, to create 'boards' of their favorite topics.
After launching in invitation-only beta in 2010, the Silicon Valley startup became the fastest site to crack the 10 million user mark, hitting that barrier by February 2012. At that point, it began driving more referral traffic to retailers than Google+, YouTube, and LinkedIn combined (but far less than Facebook). While ComScore showed that the platform had almost 25 million users in the U.S. this September, its userbase reached 70 million users this July, with around one-third of new users coming from outside the U.S. lately.
Now, the social network is valued at $3.8 billion, after raising $225 million in recent round of Series E investment led by Fidelity Investments.
To date, the company has raised $338 million, mostly from two recent rounds- a $100 million series C led by Tokyo’s Internet giant, Rakuten, last May, and, earlier this year, $200 million in a round led by Valiant Capital Partners. As others have pointed out, hat’s a lot of cash for a young startup that has yet to even attempt to make money.
A look at its new ad concept
Three weeks ago, however, Pinterest took the first step towards flipping the revenue switch, launching "promoted pins": photo ads that will showcase company ads in-stream, resembling standard 'pins," similar to Twitter's promoted Tweets, and following the trend for native ads that don't annoy users. For now, Pinterest is testing the ads for free.
Promoted pins might sound like glorified banner ads with a Pinterest skin, but Pinterest CEO and cofounder Ben Silbermann has promised that ads will not disrupt user experience, explaining that they will be tasteful, will reveal their advertiser, will be relevant and related to users' interest, and will improve based on feedback.
It's also now seeking a new head of sales to lead international expansion.
Here's what a promoted pin looks like:
Why it's a good channel for e-commerce ads
Pinterest's 50 million users don't compare to Facebook's 1.11 billion users (at least 680 million of which are on mobile, around 200 million of which are monthly active users), Twitter's 550 million users (only 49 million of which are monthly active users in the U.S., where Twitter generates most of its ad revenue), or even Google+'s near-360 million users (only 135 million of which are directly posting).
But the photo-sharing site beats out the others when it comes to funneling hungry shoppers to e-commerce sites. According to data from Monetate, published in a Business Insider report, the average order value for referral to an e-commerce site was higher coming from Pinterest than from any other site, clocking in at $80.54, compared to $71.26 on Facebook, $70.17 on Twitter, and $49.78 for traffic from Stumbleupon.
Retailers like J. Crew, an American clothing outlet, are already taking advantage of the site; J.Crew chose to debut its fall catalog on Pinterest first.
This seems intuitive; pictures are the first thing users often look at before buying a product, and Pinterest is built around the concept of photo-sharing.
For these reasons, e-commerce sites in the Middle East should not ignore Pinterest as a marketing channel. As Moe Ghashim of ShopGo previously pointed out on Wamda, the statistics on Pinterest's referrals alone make it worth paying attention to.
How long before it opens a sales office in Dubai?
As Pinterest expands abroad and brings on even more international users, the value of its referrals should increase in emerging markets.
The company has already expanded to Italy, France (where it launched an edition in June), and the U.K., and is considering expansion to Japan, planning to open in a dozen more markets by the end of the year, AllThingsD reports. Thanks to a partnership with Telefonica, a Spanish mobile operator, its app will also now come pre-installed on Android devices sold throughout Latin America and Europe.
So how soon will Pinterest open sales offices in the Middle East? Although ad spend in the region is low, accounting for only 3.7% of worldwide ad spend in 2013, digital ad spend is growing faster in the Middle East than it is anywhere else in the world, increasing by 47.4% this year, according to E-marketer, and predicted to continue growing more quickly than in any other region in the world.
Pinterest's userbase in the Middle East will have to grow before e-commerce companies allocate serious budget to its channels, however. Right now, Pinterest channels for the region's major e-commerce players are not generating a lot of engagement. Namshi's channel has a decent 984 followers and 193 likes, and newcomer Wysada has gathered up 399 followers. "While some stats say it's one of the fastest growing social media channels out there, we do not see this in Wysada although we created this channel since we started," says Fadi Sabbagh from Wysada, "to maximise on the potential of Pinterest we have to rely on the most popular networks (Facebook, Twitter) to promote, and we need the whole online business to start pushing for Pinterest, especially the eCommerce sites."
For now, it's clearly not a large priority for e-commerce players, but that could change very quickly as the social network's demographic grows internationally and it begins improving and rolling out its ad service.
[Main photo credit: sensibleinternet.com]