How does Pinterest Make Money from Pinterest Business Model

How does Pinterest Make Money from Pinterest Business Model

How does Pinterest make Money
How does Pinterest make Money

About Pinterest, Founder, Funder and Facts

Pinterest is well, I have no clue, why it exists.  All the more I don’t understand why do people need Pinterest – Boards – and other images storing solution when you can do it all with your smartphone.  I have never used Pinterest as a social tool, neither will I ever.

I have put up a script that automates posting across networks including this one.  People use pinterest for weird things – like pinning boots images, cat pictures and even pooping positions.  It is a social network business model example which gives people options to pin various images from brands and other users to their boards (pinboard) and view it later (which they never do).

Let’s understand in detail the pinterest business model and see how does pinterest make money.

Pinterest Founders: Pinterest was founded by Ben Silbermann (CEO), Paul Sciarra (Left and now with Andreessen Horowitz) and Evan Sharp in 2010.

Pinterest Funding: Appx $1 Billion from Founders Circle Capital, Goldman Sachs, Wellington Management, SV Angel, Fidelity Investments, Valiant Capital Partners, Rakuten, Andreessen Horowitz, Bessemer Venture Partners.  Last known valuation is $11 Billion (very near to Twitter’s sympathetic $12 Billion)

How does Pinterest Make Money

How Pinterest Makes Money
How Pinterest Makes Money

Are you serious?

Users pinning images and someone making money out it?  Seems impossible to me.  But pinterest business model is seriously contemplating making money out of it, yes contemplating because it is still in beta.  They have been seriously bad at making money using all the promoted features that social network companies use so they are trying to get into social commerce.

Before knowing how does pinterest make money let’s first have a look at pinterest business model.

Pinterest Business Model

Pinterest Business Model
Pinterest Business Model

Pinterest Business Model is just another social network business model where the core service offerings are free for the end user and the time share of the user being sold to potential advertisers.

You may find this worth your Time: How does FaceBook Make Money

Pinterest Business Model

Pinterest Business Model is good for visual advertisers who are into product selling which people want to see for e.g. Clothes, Shoes, Arts, Crafts etc.

Pinterest has the following revenue lines:

  1. Buyable Pins for Users (Served by Potential Sellers with a single or multiple products in them to be sold)
  2. Promoted Pins for Advertisers (Business Account Users)
    • To increase followers
    • To increase website traffic
    • To increase sales of pinned products

How does Pinterest Make Money

Pinterest has started displaying buyable pins on the website and apps along with a shopping bag (a wishlist kind of a feature).  This is an addition to the Pinterest Shop section of the mobile app. The users now have more opportunities to shop multiple items they tagged as being pretty or just something they aspired to own. The Pinterest Shop is available on both iOS and Android devices.  Individual stores (including big names like Bloomingdales) and small-scale sellers with business accounts can add their own online storefronts with buy buttons embedded in the pins.

Since users are actually looking for new merchandise all the time, advertising is a central feature of Pinterest.  Moreover, the interest of companies to make their ads look as good as possible is in the fact “What is Displayed Best gets Sold” mentality.

Let’s look at the different revenue lines for understanding how does pinterest make money.

How does Pinterest Make Money via Different Revenue Lines

  • Promoted Pins: Pinterest calls the sponsored content for Brands as “Promoted Pins.”  This is currently available in US, UK and Canada.  Pinterest charges on the basis of targeting the users.
How Pinterest Earns Money
How Pinterest Earns Money
Business Model of Pinterest
Business Model of Pinterest

Both above Images courtesy Pinterest.com

  • Affiliate Marketing: Pinterest has removed all affiliate marketing network links which users used to post on Pinterest with awesome images to that users were tempted to click on them to buy those which ultimately gave the posters some commission from the actual seller.  So I guess this is done to actually make the buy button work or itself convert to an affiliate marketer 🙂 [P.S. They tried affiliate marketing in the past and discarded it already]
  • CPM Marketing: CPM is Cost Per Mille, Pinterest tried a different version of promoted pins in which the brand will pay an X amount per instance of its pin being served to the end user.  GAP Tried this with Pinterest.

Revenue from How Pinterest Makes Money via Advertising

How does pinterest make money terminates with the perfect relation of pinterest business model to the ARPU calculations of a social network.  ARPU is average revenue per user that a social network makes from each of its active users.

Pinterest claims that it has 150 million active users and in 2015 pinterest made money appx 100 million i.e an ARPU of 60 cents i.e. $0.6!  That is really poor (and a panic button for pinterest because it is difficult to scale up ARPU significantly unless you add more product lines) amongst all the social networks out there.  Though Pinterest is the reasonably new fellow in the social network gang (but the first amongst the image based social networks, Instagram makes much more money and SnapChat has better monetization options, both of them came way-way afterwards) it is yet to scale up to the likes of FaceBook and Twitter.

Disclaimer: Pinterest Business Model and How does Pinterest make Money is a complete understanding of the author without any outside influence or facts and figures.  Use at your own discretion, all names and brands are TM by Pinterest.

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2 Comments

  1. reading this reminds me of this recent new app came across – “TROVE” where they engaged digital fashion influencers, where then users can choose choose the type of fashion influencers they can follow, and my feed would then have pictures of the fashion influencers i follow, and if i click on the picture and like what the influencer is wearing, it seamlessly show the items where you can click and direct you to the e-commerce site

    nothing really on pinterest but just thought TROVE does it better in converting picture to direct sales for retailers/bloggers – but they relatively new but as a user, pretty seamless experience

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