In Tracking Users, Pinterest Lays Groundwork for Ad Business

Pinterest is continuing the lay the groundwork for its ad business. The company announced that it will start recommending pins and boards to users based on sites they visit that have the "Pin It" button embedded.

It marks the first time the network has put the massive amount of information it has at its fingertips about users' web activity -- made possible by the ubiquity of the "Pin It" button -- to use. While the current implications of that data collection are limited to content relevancy, it's not hard to see what it could mean for the company's ad business -- which still doesn't exist -- down the road.

For example, Pinterest could conceivably have a retargeting business where it sells "promoted pins" to a retailer like Gap that wants to get items that Pinterest users looked at on its website in front of them again while they're browsing the social network. It could also use the data to build up valuable audience segments of users interested in baby clothes or wedding dresses to sell to marketers who want to advertise on Pinterest or even eventually use it to create a full-fledged ad network.

But for now, Pinterest will only use the data for recommendations. "If you're planning a party and have gone to lots of party sites recently, we'll try to suggest boards to make your event a hit," said a blog post explaining the change.

At the same time that the company announced that it will start making use of the data it collects about users, it also announced that it will let them opt out of data collection altogether. A "Do Not Track" option will now be available in account settings.

Pinterest also amended its privacy policy, effective August 26, to make its tracking practices and use of cookie data more transparent. For example, a line that currently reads "We get technical information when you use our products" has been expanded to read "We also get technical information when you use our products or use websites or apps that have Pinterest features."

While the company hasn't announced when it will launch ads, it appears to be putting the building blocks in place with key hires over the last several months. In February it hired Steve Patrizi to be head of partner marketing, a role that involves working with brands to help them master best practices for publishing on the platform. Presumably brands that are actively publishing on Pinterest will be more apt to purchase ads from it when the time comes.

It also hired John Yi last month to lead partnerships with marketing developers. To date Pinterest hasn't released tools for developers looking to build software to help marketers with publishing or analytics, but Mr. Yi's hire suggests that a Pinterest API could soon become a reality. He previously ran Facebook's preferred marketing developer program.