Pinterest President: Value of Clicks to Mobile Sites Will Go Away

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Pinterest has had an extremely busy year to say the least.

It's acquired several companies. It's poached executives from companies including Google and Snapchat. It's also invested deeply in its search advertising biz, to capitalize on the two billion searches it gets every month. In August, the company changed the way it sells ads to let marketers bid on inventory through an auction-based process. And behind the scenes, Pinterest has been busy improving its API and striking deals with tech companies like Acxiom and Epsilon so it can give marketers the same targeting capabilities found on Facebook and Twitter.

Yet its biggest move might also be its most recent.

Last month, Pinterest said it was making a big bet on video. Its first move into the space was table stakes: Marketers can now buy Promoted Video ads on the platform, including the option to let consumers buy products related to what they're watching without having to leave the page.

Now Pinterest wants more video. A lot more. But it has no intention of asking its users to share clips on applying makeup or building a mahogany desk, for example. It's leaving that task to top-tier publishers, major media companies and brands. They should contribute, the company argues, because its self-proclaimed base of 100 million-plus visitors use the platform to save things they want to buy.

We spoke with Tim Kendall, president at Pinterest, about the company's plans for video and how it views mobile advertising. The interview has been lightly edited for clarity and length.

Ad Age: Pinterest previously said it won't look to its users to bolster its video offerings. That said, how else will video play a role on Pinterest, beyond video ads?

Tim Kendall: That is 100% right. It is important to think about what Pinterest is in terms of how it is used by its users. It is very distinct from a social network. There is very little user generated content on Pinterest. The video that we think will thrive and do well on Pinterest, in much the same way that Pinterest works today, it is not supported or fueled by user generated content; 75% of the content that is pinned into Pinterest is from partners like experts, brands, retailers and merchants.

What we're trying to build is a catalogue of ideas on your phone that you can browse and you can search. And it is clear that video is going to make sense in regards to the catalogue of ideas on the phone.

Tim Kendall, president at Pinterest.
Tim Kendall, president at Pinterest. Credit: Pinterest

In fact, we feel we have a really unique opportunity to satisfy both the needs of users and partners with video that others haven't been able to do. If you look at the video that is disproportionately consumed on the phone today, it's short, snackable type things like user generated content or news.

Where we think we have an opportunity -- and if you think about what Pinterest users do -- they use the service to plan their life. They use it for, "What am I going to cook for dinner tonight? What shoes should I buy for the event when I go out Saturday afternoon? Where do I want to travel to? What kind of home do I want to live in a year? What kind of car do I want to drive in two years?" There are all these utility-oriented planning things that users are doing, so we think there is a really unique opportunity for us to incorporate video in that way around those topics.

There is all this high-utility instructional video out there that's not getting consumed through the social networks on the phone. Most people are watching the short snackable UGC or news. Our users are coming to Pinterest to figure out what to cook, for example, and all of that can just be enriched with high utility instructional videos.

Ad Age: That sounds like you want to get publications and media companies in the mix. Is that accurate?

Mr. Kendall: Yes. We think that is going to be the case especially with our efforts in video; it is going to become increasingly important for content providers.

We think it is important that we figure out the right value exchange with those content providers in a way where they can provide their video and we can show it to the right people and then they get value in exchange for providing us with that video.

Ad Age: When you're talking about the value exchange between a publisher or media company, is that just exposing them to your audience or is there an actual monetary value?

Mr. Kendall: I think it is really early days for us. But I think it is pretty clear that the world of the value being the click to your mobile website is going to eventually go away.

Ad Age: Can you elaborate on what you mean when you say the value of the click is going to go away?

Mr. Kendall: I think for a media publisher whose value and assets is just media, the model today is "I have to get people onto my site to watch my media." It's not clear that in several years that necessarily needs to be the model. What media partners want is for their media to be consumed and I think they are open to exploring where and how that media gets consumed, whether it is on their website or within a partner app. I think they are open to having that conversation as long as value gets delivered.

Ad Age: Let's switch gears. I've spoken to a lot of agency executives in regards to Pinterest and many said that when Pinterest launched its API a year ago it wasn't very well received. Can you share with our readers what has changed?

Mr. Kendall: I would just disagree with that statement, that our launch wasn't smooth. We launched in June 2015 and it was invitation-only for partners to build world-class experiences and we didn't let everyone on.

All partners don't necessarily love it, especially the ones that weren't in the beta.

We now have 11 API partners and the data that counters your question is 10 months after the launch, 50% of our revenue was generated by these partnerships. So, it went from 0% of revenue to 50% of revenue in Q2 of this year. All going through the Marketing Developer Partners program and the ads API.

Ad Age: Has that revenue continued to grow?

Mr. Kendall: Yes.

Ad Age: Can you put it in perspective?

Mr. Kendall: Well, we grew revenue from 2014 to 2015 five fold. And we are very pleased with the revenue trajectory from 2015 to 2016. The way that we release products is through alphas and betas and we actually run those through the MDP as well.

Ad Age: So, few would deny the intent that lives on Pinterest. Mary Meekers brought it up in her Internet Trends report and anyone who has ever been engaged to be married has likely created a Pinterest account. But can you explain how return on investment is measured when transactions happen outside of Pinterest? Because people can get inspired to buy something, but purchase it at an actual store.

Mr. Kendall: What we have started to do on the measurement side is we released our Oracle Data Cloud studies in June across 20 campaigns in consumer packaged goods. We demonstrated a five-times lift over the benchmark in terms of sales generated by ads shown on Pinterest. We hired Gunnard Johnson, who runs measurement science and insights for us. Immediately prior to that he ran measurement for Snapchat. And I think that is a pretty telling move in terms of the potential that Gunnard saw in our ability to deliver on that intent story and show measurable sales.

Something we hear quite often is social media engagement doesn't create value, that it's just about the impression. And we just fundamentally see something very different on Pinterest. What that means is when people save something, click on something on Pinterest, the multiplier is they are more likely to buy.

Ad Age: Anything else you would like to add?

Mr. Kendall: We do think the click is still very important, but let's run the click through the lens of a an advertiser, like a retailer.

Imagine someone like Target comes to us. Traditionally, the way Target might come to a publisher like Pinterest is they would say, "Hey, I want to drive sales on" And what the publisher would do is he would put ads in front of people who would click on them and users would then go buy things on

But as we move to the phone that becomes, quite frankly, a harder value proposition, especially for the user. And as more and more time and attention gets focused within these social services and utility services like us, people are just spending more and more time there.

So if Target came to us and wanted to sell more stuff from what we would suggest is they create a Promoted Video ad that shows how a living room furniture setup could be configured in a home. It would be more of a "how to" kind of video; they would show how to set up your living room with an ottoman, a couch, and if a user taps the video, it would play more fully. Underneath it, we could have a carousel or tray of all the things in that video that can be bought through Buyable Pins.

So, here is the value proposition: The user is happier because the user doesn't have to go somewhere else and when they are in the moment, and are compelled to purchase something, they can do it on Pinterest and still get what they want from Target.

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