Having succeeded in making scrapbooking a Web craze, Pinterest Inc. now has a new goal: to reinvent online advertising.
The
four-year-old digital scrapbooking website is preparing to launch ad
sales in the second quarter with a bold pitch. Rather than Web ads that
urge people to "click here!" or "buy now!," Pinterest wants to make
artful Web ads that people actually love.
New ad chief
Joanne Bradford,
50 years old, said Pinterest's goal is to build ads that can
themselves be fashioned into works of art—akin to ads for Absolut Vodka
that a young person might tear from a magazine and stick on a wall.
Pinterest
plans to start with a select group of marketers who will be the first
to pay for so-called "promoted pins" on the site, said Chief Executive
Ben Silbermann.
Typically users "pin" or copy professional photographs from all
over the Internet and post them to personal Pinterest pages. Early
copies of Pinterest ads looked similar to other images posted to the
site but with the label "promoted pins" on the bottom border.
The company declines to comment on precise timing, costs of the ads or who the first marketers will be.
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Since it launched in 2010, Pinterest
has built a following of 40 million users in the U.S., mostly women,
according to eMarketer, who post images on the site of anything that
interests them—from skiing to travel to kale recipes.
Investors
love the company, reckoning that it's a place where marketing dollars
will easily flow. They've already pegged Pinterest's value at $3.8
billion, even though the site has generated virtually no revenue to
date.
Among the advertisers who have quietly tested promoted pins to date are home décor site Wayfair, hotel chain Four Seasons and
Unilever's
ULVR.LN +0.25%
TRESemmé and Hellmann's brands. All four said they were pleased
with the results but declined to say whether they would continue
marketing on Pinterest.
As the
scrapbooking website prepares for its new effort, the question is
whether it can convert advertisers, used to promoting themselves on the
site free of charge, into paying customers.
Ms. Bradford, who joined Pinterest after stints at
Microsoft Corp.
MSFT +0.82%
,
Yahoo Inc.
YHOO -3.32%
and
Demand Media Inc.,
DMD +1.88%
acknowledges "there are brands that are getting unbelievable
results without a paid product." But she said Pinterest was "amazed" at
the level of interest from advertisers in paying for spots.
Both
analysts and ad executives are optimistic. "We think it's going to ramp
up very quickly," said eMarketer social media analyst
Debra Williamson.
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Some say Pinterest needs to be
careful. The key to success isn't pushing commercial messaging too
overtly. It's OK to feature Hellmann's brand messaging in a promoted
pin, but better to post a recipe featuring Hellmann's, said
Jennifer Gardner,
Unilever's director of media investment partnerships North
America.
"The goal for us is to make
sure you're adding value," Ms. Gardner said. "Pinterest needs to be very
careful. Ads need to be on point."
Others say some advertisers will require a certain amount of education. "It's a bit like
Twitter
TWTR -4.22%
in the early days," said
Jordan Bitterman,
chief strategy officer at Mindshare, a media-buying firm. "It may
take time for them to train brands on things like 'what am I trying to
get people to do on Pinterest exactly?'"
Until
now, advertisers have used Pinterest to post images to their page that
they like associated with their brand or some that subtly promote their
business. Users see a brand's pin if they choose to follow that brand or
if it's "repinned" by someone they follow on the site.
With
paid ads, though, marketers will have a chance to reach more of
Pinterest's audience than they do now. Even the most active brands claim
only a few hundred thousand Pinterest followers.
Promoted
pins will appear across the site and can be targeted to specific
searches. Thus when people are searching on Pinterest for travel ideas,
for example, they might see a pin from an advertiser like Four Seasons.
But that ad would be a photo of a destination or resort, and it would
look like a photo a user might post, rather than an ad touting current
Four Seasons rates in various cities.
Among those that are interested in paying is
Whole Foods
WFM -2.34%
Market Inc., which without paying the site has accumulated nearly
175,000 Pinterest followers who share images of the supermarket
company's Really Nice Cream and recipes for Caesar Salad with Pancetta.
Whole
Foods global social media coordinator
Natanya Anderson
said she could see the value in paying for advertising on
Pinterest during key holiday and promotional periods, and would like to
be able to promote the company's profile overall.
She added that paying for ad space may also become necessary to avoid getting drowned out, something that has happened on
Facebook.
FB -4.67%
"Pinterest's only going to get bigger and noisier," she said.
Ad
executives said Pinterest users have demonstrated an inclination to
purchase products they see on Pinterest, based on ad executives'
internal tracking data, making them more valuable to advertisers.
Wayfair
has found that visitors from Pinterest were 20% more valuable over time
than average Wayfair visitors in terms of revenue, according to CEO
Niraj Shah.
And the traffic derived from the ads during its promoted pins
test, which featured furniture and home accessories, was incremental to
the brand's organic audience on Pinterest, he said.
Pinterest
plans to charge advertisers either via a cost-per-thousand impressions
model (which typically suits broader advertisers) or a cost-per-click
model (which might appeal to e-commerce brands), depending on their
goals. Four Seasons, as part of its recent promoted pins test, created
one highlighting a $70,000 hotel package with a private jet trip to Bora
Bora. Despite its cost, the ad was "repinned" more than 9,000 times,
and Four Seasons received over 500 requests for a brochure, according to
Pinterest.
