$137.8B U.S. ad spend for top 200 advertisers
Pinterest is on the fast track to success, but it faces a critical juncture as it prepares to roll out its first ad platform. The visual-based social network has amassed 40 million users in the U.S. alone, has raised $564 million and is valued at $3.8 billion, according to investors. As Pinterest announces its advertising plans, dozens of brands are jockeying to be among the first to use its premium ad offering.
As the company begins to lock down deals with brands and agencies, two things are clear. First, Pinterest must stay true to its audience by ensuring that these ads do not detract from the overall experience. Luckily, Pinterest has publicly expressed its desire to make "artful Web ads that people actually love," which is a great first step. And, judging by the way it has carefully recruited advertising partners, it's evident that its core focus is in preserving the integrity of the platform.
The second, and more difficult, challenge for the startup is to define its own metrics for success by communicating the effectiveness of ads on its platform in a way that captures their unique value as a brand-building platform. Pinterest must do so quickly, before the marketplace determines this language for them and chooses metrics that don't play to their strengths.
Since Pinterest allows people to showcase their aspirations -- where they want to vacation, what they want to wear, how they want to decorate their house, the cocktails they want to drink, and so much more -- it has created a unique hub where products and items are intrinsically linked to emotions. This is the world brand marketers love, but it is clearly not what direct marketers are after. Pinterest is not about seeing a designer handbag or breathtaking vacation home and immediately buying it. Instead, it's about brand marketing -- about creating a desire for something and cultivating it over a longer period of time. So the first thing Pinterest needs to do is adopt language and metrics around brand.
Unfortunately, the internet's gravitational pull towards direct marketing is at work. We're already starting to see direct metrics in the Pinterest story. The Wall Street Journal reported that a recent promoted pin from Four Seasons resulted in the luxury hotel receiving more than 500 requests for a brochure, and conversations across the industry have characterized Pinterest as "the ultimate catalogue." It's been said that Pinterest has plans to price ads placed in the "Everything & Popular Feeds" on a cost-per-thousand-impressions basis, but will use a cost-per-click model for ads that are targeted based on search keywords.
What a loss for Pinterest if it succumbs to the "curse of the click." The moment that brands and their agencies start evaluating Pinterest's ads based on clicks, cost of acquisition or other measures that are tied to short-term ROI is the moment the virtual pinboard will lose. Once you're in the revenue business, there is intense pressure to change yourself in order to win more revenue, and being true to your nature becomes secondary. Pinterest must invest the time and effort into educating advertisers on the meaning and value of branding impressions and measurable events inside the platform. As actions go, repins are the obvious first step, and benchmarking repins to give brands a point of comparison is a good place to start. Understanding, through research, the impact of time spent with an image will give them another metric -- the relationship between the length of time that a user gazes at a photo and the likelihood that they will recall that brand or associated message -- one that can help establish the feedback loop between gaze and desire.
Pinterest must keep its status as a platform for brands front and center as it embarks on its advertising journey. It must inform marketers about the types of ads it creates, the way it segments audiences, and how its measures ads. For brand marketers, awareness is more important than an immediate action, and Pinterest must not only make this clear, but also only accept as partners those advertisers who understand this distinction and are willing to play to Pinterest's strengths. Otherwise, the company will only hurt itself in the long run by trying to perform against metrics that aren't natural to its platform, ultimately alienating its audience.