Social media and commerce should go together like peanut butter and jelly or a wink and a smile.
Social media is a hotbed of opportunity, with its millions of users worldwide up for grabs, many of whom are often talking about products and (in the age of mobile wallets and embedded payments data) are often just a click or a tap away from completing a purchase. As study after study as demonstrated, whether surfing the Web on desktop or mobile, the vast majority of Internet users are logging on to do one of three things (pornography, it should be noted, is generally eliminated as a category): research, hang on social media or buy things.
It seems easy and obvious enough to combine at least two of those things on social media — the platform already has the eyeballs, drop in some stores and, bang, instant digital mall.
Except that so far it really has not been that easy.
For all their potential and all of the inarguable power they have to push consumers toward products, social media platforms that have tried to transition into a sideline business as a marketplace quickly realize that their users, however enthusiastic, aren’t really there to shop. On Twitter they want to “talk,” on Facebook they want to share pictures of their kids, on reddit they want to disprove the moon landing and on 4chan they want to offer the most compelling argument against free speech in human history.
Merely dropping in a commerce option through a scattering of buy buttons at best was received with sort of neutral indifference by most social media users, and at worst actively annoyed them with the intrusion. And while 2015 saw many advances made in social commerce, none were exactly miraculous breakthroughs.
With one possible exception — or at least a noticeable asterisk.
How Pinterest Dares To Be Different
Pinterest, the Internet’s cork board, is a little different from both its peers in social media and in the Northern California tech scene. In an environment where everyone is always running to be first to the market with the newest game changing innovation that tends to occasionally engender a “ready, fire, aim” attitude among the higher stakes players, the team at Pinterest has always been a bit on the circumspect side.
By its concept alone, Pinterest has always been the social media platform best suited for commerce due to its focus on inspiration and actual products. It is also uniquely influential in motivating purchasing decisions by its users, which clock in at an impressive 100 million or so. A 2015 Shopify study found that 96 percent of Pinterest users go to the site to research a product before buying.
And yet even with that long and well-established track record of motivating consumer purchases, Pinterest itself didn’t exactly rush into the eCommerce game directly, only launching its own Buy Buttons a little over six months ago.
“We believe we have really built the best and most comprehensive end-to-end solution for our merchant partners with our commerce enabled pins,” Pinterest’s Head of Business Development Gene Alston told MPD CEO Karen Webster in a podcast interview.
“The way we think about the vision of our product, our core product is about save, discover and take action. We want people to take all kinds of actions in Pinterest, and that is just an organic part of the product. If we do a great job at making those organic experiences great, we think partners will share value by promoting those Pins, which is an advertising product that allows you to get more reach.”
And because Pinterest’s vision is always fairly centered on those three core ideas the firm’s evolution toward those buyable pins was if not gradual, certainly highly controlled.
Almost two full years before the buy button existed, Pinterest launched Rich Pins with embedded information like product pricing and availability. That evolved into Promoted Pins in 2014 that came to serve as Pinterest’s main advertising product — and a firm revenue stream. However, despite its obvious revenue generation potential, Pinterest beta tested those pins for a full 8 months before rolling them out to their commercial partners at large.
And those Sponsored Pins, once an established part of the Pinterest ecosystem, also provided the natural home for those Buy Buttons, which Alston described as a much heavier duty version of the Sponsored Pins. Containing “fuller information” than the standard Pin, Buyable Pins also contain a price written in blue, and a blue Buy Button that Alston described as “incredibly hard to miss.”
Today, there are about 60 million Buyable Pins on Twitter. Interestingly, those Pins are not directly generating revenue for the firm. According to reports in Quartz, Michael Yamartino, head of commerce for Pinterest, said the firm does not charge merchants any fees or take a cut of sales; instead, the tool is used as an inducement for advertisers to buy space on Pinterest.
The hope is that buyable pins will ultimately strengthen its advertising business.
Apart from its rather slow-paced approach to taking on commerce, Pinterest also stands out for its financials — and the apparently great expectations attached to their future.
Some estimates peg Pinterest’s 2014 revenue at around $25 million, based on investor documents reviewed by The Wall Street Journal. Those documents also predict $2.8 billion in revenue and 329 million users by 2018.
Those figures, notably, are not verified by Pinterest, which offers no official comment.
And as a new year opens, the IPO rumors about Pinterest are again circulating fresh on the breeze. But those rumors have become common since 2014 — and though many high-profile, high valuation startups are fearing the great snapping shut of investor wallets and a forced spin of the wheel of fortune on the public market, Pinterest’s revenue projections indicate they might not be facing a similar risk.
And if past is prologue, Pinterest might just want take some more time to perfect its product before playing with the public investors.