Social media ‘pinboard’ Pinterest has soared in popularity this year, but the firm is yet to set a clear monetisation strategy. Gary Angel, President at Semphonic, suggests that with the kind of personal data that a site like Pinterest can gather, their greatest potential is to help other sites perform more effective targeted advertising by providing real-time profile data. By reflecting their interests, suddenly real-time segmentation and personalisation becomes an option, even for anonymous users…
Recent public reports from internet traffic monitors have highlighted why Pinterest is drawing so much attention and it isn’t just a matter of traffic growth. Traffic matters, of course, and for social networks the traffic trajectory is incredibly important. But what makes Pinterest rather special as a social platform is the degree to which it runs counter to the “island” mentality most social networks create.
Bottom line, Facebook and Twitter are happiest when you’re on Facebook and Twitter. And most social experiences are like that. They grow and flourish by creating an inward looking community. Pinterest, on the other hand, is driving huge amounts of referral traffic. Relative to its size, it is driving far more outbound traffic than platforms like Twitter or Facebook ever have, making Pinterest of special interest to the enterprise. Unlike Facebook or Twitter, Pinterest feels like it can be monetised by the enterprise. And if it can be monetised by the enterprise, surely it can be monetised by Pinterest?
Despite this apparent opportunity, Pinterest faces many of the same monetisation challenges that other social platforms encounter. Unlike Facebook, which collects a fairly robust set of traditional demographic and interest information as part of your core profile, Pinterest has a collection of artefacts that may have very different levels of identification. When you pin something, the enterprise may know a great deal about that particular product but other enterprises, and Pinterest itself, may know next to nothing about it, which creates a real profiling challenge.
This is important because it’s a combination of eyeballs and profiles that make a social platform interesting to the enterprise. Media dollars follow eyeballs, but they need to understand who those eyeballs belong to and what they are looking at to make ad-buying decisions. Building interesting marketing profiles based on Pins is a significant behavioural challenge, but it’s a problem that if solved, will significantly improve Pinterest’s monetisation opportunities – both on the ad side and, potentially, on the referring pass-off.
Pinterest will also face challenges around content control. Youtube has been much less effective in monetising their service than Hulu because serious ad-buyers want some degree of content control. Pinterest may not have quite the downside of Youtube but it lacks the upside of Hulu. It is, at best, a content mishmash and the most obvious types of targeting may well leave a visitor viewing your ad next to a pinned product of a competitor. That’s interesting but not necessarily ideal.
So while any platform with multiple unique visitors can sell ads, Pinterest as an ad platform has some challenges.
We believe the biggest advantage Pinterest has versus competitors is the existing model of driving significant referrals. Pinterest can’t easily charge for those referrals, but it can add value to those referrals. One of the holy grails for most enterprise sites is to understand more about their anonymous visitors. Any enterprise worth its salt can find ways to understand their identified customers and optimise their experience. It’s much harder with anonymous traffic.
Third party aggregators like Blue Kai are building a business (at least in the U.S.) around tracking visitors across properties and then profiling them in real-time. This allows sites to significantly improve their customisation for anonymous visitors. Given the high-volume of referrals that Pinterest generates, we think there may be a monetisation opportunity to profile visitors during the pass-off. A standardised interest-based profile here would allow Pinterest to treat referrals almost as an advertising pass-off. They wouldn’t have to charge for the pass-off, they could charge for the Pinterest profile that could come along with it. This isn’t too different than Facebook’s strategy with Connect. But Pinterest has advantages here that Facebook doesn’t – because referring out to sites from Pinterest is a natural and constant function of the site.
For the right kind of enterprise, the advantages of Pinterest as a marketing platform are obvious. If you have interesting or unusual products that appeal to the Pinterest demographics, you have a real shot at high marketing ROI. Like any social channel, it takes a significant investment. But compared to Facebook or Twitter the ease of fitting Pinterest into a product-based ecommerce strategy is striking.
But while that ease of third party monetisation is sure to attract a healthy enterprise community – a community that will itself boost Pinterest traffic significantly – it doesn’t necessarily solve Pinterest’s own monetisation challenges. With eyeballs comes revenue. But revenue per eyeball will be critically dependent on Pinterest’s ability to behaviourally profile its audience in an interesting fashion and find new ways to monetise the pass-off to the enterprise.
By Gary Angel
President
Semphonic
www.semphonic.com
