Seeking to scale its ad business ahead of a much anticipated IPO, Pinterest said it's updated its advertising strategy and will place more focus on expanding its keyword search and audience based buying offerings.
The move puts the company in a unique position to offer brands and marketers a home feed advertising solution -- landing pages of Pinterest users -- and a search product that sees more than two billion monthly searches.
The company is now offering its search inventory separately to advertisers, something it previously had not done before. More importantly, Pinterest's head of global sales Jon Kaplan says the platform will feature the same kind of keyword based buying search marketers are familiar with -- such as those found on Google -- to be applied on Pinterest.
"Previously, we have never talked to a search engine marketing company or agency," Mr. Kaplan said. "So, literally, we never spoke to people who buy search even though we have over two billion monthly searches on the platform."
That's now changing and the company is looking to further build the infrastructure required for advertisers to buy search at scale. It's also working with many of the search engine marketing agencies through major holding companies to bring demand to its platform. Should they achieve that, they'll gain a small slice of the largest contributor to digital advertising, as search generated $29.2 billion in ad revenue in 2015, or nearly half of the $60 billion generated in digital ad spend overall, according to the Interactive Advertising Bureau.
According to Mary Meeker's 2016 Internet Trends report, about 55% of Pinterest users use it to find or shop for a product. Additionally, about 75% of the content repinned on Pinterest originally comes from brands, the company says.
"People are very excited about the prospect of a complementary or additional player in the search space and I think the visual nature of Pinterest is something that is really unique to us and unique to the search experience," Mr. Kaplan said. "What you'll see us do is innovate in formats and targeting as it makes sense on search and takes advantage of the digital nature of how people search on this platform."
One company welcoming the changes is Target. Brent Rosso, VP-digital media at Target, says the company has been advertising on Pinterest for years because it sees similarities between how consumers browse on its website and how they use Pinterest to discover and search for new products.
"First, we know people on Pinterest are generally interested in shopping, so it allows Target to engage consumers at a moment of strong intent," Mr. Rosso said. "Second, these new offerings will allow us to connect more directly to Pinterest consumers and reach them in new ways."
Meanwhile, Pinterest has also given advertisers the ability, through partnerships with Acxiom and Epsilon (and potentially direct integrations with data management platforms in the future), to combine their data with Pinterest's to buy precise audiences in a similar fashion to how they're purchased on platforms such as Facebook, Mr. Kaplan said.
"There aren't any platforms that I'm aware of that have both of those sitting in the same platform," said Mr. Kaplan, who worked at Google for 12 years in areas including search and DoubleClick prior to joining Pinterest in March. "What we're doing is building what I would call a performance platform that's doing very sophisticated audience-based buying and tapping into the explicit intent that exists in search."
And advertisers can get very specific, as Pinterest has more than 400 signals that identify what a user's interests are.
Previously, advertisers could only buy affinities -- or categories like food or fashion -- and couldn't tailor an ad based on what they knew about the user, said Helen Lin, U.S. partnerships lead at Publicis Media.
"Now that we're able to bump up our client's first party data, they're excited because now they're going to be able to personalize their message," Ms. Lin said.
Ms. Lin heard about the updated strategy in meetings with Pinterest during the Cannes Lions Festival of Creativity and said she jumped at the opportunity for her holding company to be the first to leverage Pinterest's audience-based buying.
"We love the Pinterest platform because their searches are very heavily unbranded -- meaning users on its site are looking to discover new ideas and engage with new products and haven't necessarily decided on what they want," she said.