How Pinterest Is Changing Its Pitch to Advertisers as It Prepares to Go Public

February 22, 2019
Updated 2mo ago

By Michelle Castillo

About six months ago, Pinterest stopped telling companies it was a place for aspiration and started telling them it was a place of inspiration, according to an ad executive.

Though the wording may seem like fancy marketing speak, the slight distinction indicates Pinterest wants to be seen as a place people look for items to buy. The company confidentially filed for an initial public offering at a $12 billion valuation on Thursday, according to The Wall Street Journal, and is gearing up to go public mid-year, per multiple sources. If it can convince advertisers its ads actually lead to direct sales, the revenue will only increase as the company grows.

Pinterest is on track to hit near $1 billion in ad revenue in 2019, according to a person familiar with the matter. (Research firm eMarketer estimated 2018 revenue at $774 million. ) According to one ad executive, among clients who have bought Pinterest ads, many in the consumer packaged goods space and large retailers have increased their budgets 30 percent to 40 percent year-over-year.

The ad money is not shifting from Google directly, but coming from other traditional media budgets like print, radio, and television, the person noted.

Pinterest declined to comment.

To fuel revenue growth, one of Pinterest's main focuses is getting ad business from consumer brands, according to multiple sources. Pinterest has made it easy for its users to shop within its site, which is perfect for businesses that only sell their products online. People who use Pinterest are more likely to buy something directly from a brand as opposed to shopping at a retailer that sells multiple similar products, an ad agency source noted. Another potential area Pinterest is exploring for ad revenue is international markets like Europe and Latin America, where it is seeing the majority of its user growth.

About 250 million people use Pinterest each month, a minuscule fraction of Facebook's 2.32 billion monthly active users. But by positioning itself more as a search platform rather than a social media company, it frees itself from having to compete with the massive scale of its competitors.

While Facebook and others can get a company name in front of a massive audience, many companies have struggled with proving direct return on investment by demonstrating that ads lead to direct sales. Pinterest is differentiating itself as a place where a dedicated audience comes to buy a brand's products. And if it can convince advertisers its ads actually lead to direct sales, Pinterest's revenue will only increase as the company grows.

By distancing itself from social media companies, Pinterest also removes itself from the fake news and brand safety issues other platforms are facing. Pinterest announced on Thursday it was blocking search results for vaccinations, after seeing a rise of anti-vaccination misinformation on its platform. The move showed the company has no problem taking a stand on controversial topics. It also indicated the company has more freedom to make those kinds of decisions ー because Pinterest isn't as reliant on hard news for content as other companies.

Still, many remain skeptical that Pinterest will be a top 10 advertising platform. However, if it continues to grow its search capability and its ability to target customers, advertisers believe there will be a growing pot of money earmarked to buy ads on the platform. While it won't be a giant, that might be enough to keep it growing and on solid ground for years to come.