Pinterest is acquiring ad tech startup Kosei, a data firm that specializes in targeting ads based on relationship and recommendation modeling.
The move is an effort to make the company's relatively new Promoted Pins offering ever more highly targeted. Joanne Bradford, head of partnerships at Pinterest, said that Pinterest is "aggressively moving into ad tech and the ability to serve the right ad in the right place. We saw great early results with just a little bit of effort, so we're acquiring Kosei." Ms. Bradford is a veteran in the ad world, working at companies like Yahoo and Microsoft.
The acquisition comes as Pinterest works to position itself as an essential social-media company for brands. The company in 2014 formally rolled out ads or Promoted Pins, announcing it was looking for ways to allow advertisers to target people in a brand's customer database. It also offered free analytics tools for brands and introduced a new editorial product called Pin Picks. Ms. Bradford said 2015 will be a big year for Pinterest in the new-products arena, and Kosei will aid in a "better targeting capacity."
Pinterest has about 70 million active users -- or users that visit Pinterest more than once a month -- according to comScore. Advertisers include Bank of America, Kia, Kraft, Unilever, General Motors, Target, Procter & Gamble and others.
Kosei's point of differentiation is that it has people who are highly skilled in data science, machine learning and recommendation engines, "who've created a unique technology stack that drives commerce by making highly personalized and powerful product recommendations," said the company in a statement. "Kosei has built a highly intelligent system for sifting and organizing massive data sets and making recommendations." Pinterest also said that Kosei is building a graph that understands more than 400 million relationships across 30 million products.
Kosei was founded in 2014 in Palo Alto, Calif., by Lance Riedel and Jure Leskovec. Prior to co-founding Kosei, Mr. Riedel was chief technology officer at The Hive, an "incubation studio that funds and launches big data businesses focused on intelligent decision making," according to the statement. Mr. Leskovec is an assistant professor of computer science at Stanford University. His research focuses on "mining and modeling large social and information networks, their evolution and diffusion of information and influence over them," the statement said.
Pinterest uses machine learning for things like algorithms that allow object recognition and related object recommendations, ad click prediction and to detect spam content and users.
"We're sitting on a very large amount of consumer insights associated with brand actions, and this acquisition will help us accelerate our ad-product development," said Ms. Bradford. In other words, Pinterest is banking on the acquisition improving the precision of the placement of the Promoted Pin, making it more relevant for both the brand and the user.
She added: "Most marketers try to force themselves into a place via retargeting with no context, but we think we can build a better recommendation product for a variety of things like products, places, recipes, what outfit to wear, based on applying Kosei's engineering skill set to the data."
"With these leaders in machine learning and recommendation systems, we can move faster in discovery and monetization, and building an infrastructure to help brands better understand customer intention and deliver the best content to Pinners," said Michael Lopp, head of Pinterest engineering, in a statement.