Pinterest only launched its first paid ads with a group of brand marketers last month, but it's already setting out to court advertising's long tail.
The social-bookmarking company is rolling out a self-serve, auction-based ad system that it says is currently aimed at small and medium-sized businesses. Unlike the ad business it's been getting off the ground with big brands like Kraft, Nestle, Gap and General Mills, which is priced based on CPMs -- or cost per thousand impressions -- the self-serve auction will take bids on a cost-per-click basis.
And while Pinterest has set high spending thresholds for brands to experiment with its "promoted pins" -- asking for $1 million to $2 million commitments when it was shopping the ads around this winter -- pricing in the auction will be set by the marketplace.
"The ultimate price over time will be determined, as all auctions are, by how much competition and demand there is," said Don Faul, Pinterest's head of operations.
Pinterest has been testing the CPC-based auction with mid-market advertisers like retailers Vineyard Vines and Nicole Miller and the photography service Shutterfly, and it intends to add more to the mix while not opening the floodgates yet.
Given slow and methodical way it's gone about getting its ad business off the ground, the company's recent haste is striking. Pinterest has raised $564 million since it was founded in 2010.
"It remains to be seen how quickly they roll this out, and they're being very tight-lipped about how quickly," said Rebecca Lieb, an analyst for Altimeter Group.