CFOs may not know it, but their company has probably been pinned.
Someone, somewhere, has likely taken a liking (or disliking) to your product or service (as long as there’s an image for it on your web site), and has shared that image with his friends on the social-networking site Pinterest. After all, with more than 23 million unique visitors (up from 1 million in July 2011), it’s the third-largest social-networking site in the United States, after Facebook and Twitter. But unlike Facebook’s ads, sponsored stories, and promoted posts, and Twitter’s promoted Tweets, trends, and accounts, you didn’t spend one penny to get your company in front of some percentage of those 23 million Pinterest users.
Pinterest is a social photo-sharing site that looks like a bulletin board or scrapbook. It allows users to create personal, image-based collections of interests, products, fashions, animals, and more on their personal Pinterest page, which Pinterest calls a Pinboard. Users can then “re-pin” what other pinners have posted, similar to the retweeting function on Twitter, or “likes” on Facebook, which some businesses (although, as Facebook itself admits, not enough) pay to post and promote.
Despite its freemium business model and almost no revenue, Pinterest, which launched in 2010 and employs 35 people, was reportedly valued at $1.5 billion after it raised $100 million in a funding round in May.
Businesses can create their own Pinboards, again, for free. And according to a recent survey of 1,500 U.S. consumers by comScore, a digital marketing analytics provider, Pinterest users follow an average of 9.3 retailers, compared with 8.5 followed by Twitter users and 6.9 by Facebook users.
But Pinterest doesn’t provide businesses with user metrics, collect personal user information (as does Facebook) that businesses can then use to better target their advertising, or track users (as does Google) so businesses can place ads in good spots at good times. Without that data, Pinterest can seem more like a business toy than a business tool, says Forrester analyst Darika Ahrens. (Pinterest declined to speak to CFO and doesn’t disclose any financial figures or user statistics.)
In Search of Payback
Toy or tool, it’s easy to see why businesses might take an interest in Pinterest. What’s not so clear is how a Pinterest board can affect a business’s top or bottom line, except for the operating costs of devoting resources to creating and managing company Pinboards.
“Pinterest in itself doesn’t have a direct commercial value,” says Ahrens. “It’s best used as part of a wider brand-building strategy, not a direct performance activity.”
Bob Nanna, marketing manager at youth-oriented online apparel merchant Threadless, says the 12-year-old company was an early adopter of Pinterest largely because of its emphasis on pictures. Threadless’s strategy, he says, is to pin objects on to 22 different Pinboards that showcase design and photography, but are not necessarily related to Threadless products. The aim is to entice users to follow the company, then the company uses more targeted Pinboards to highlight certain products.
“We have Pinboards that are run by our employees that are specifically lifestyle-based,” Nanna explains. “There’s a music one that I help curate [Threadless Loves Music, with pictures of bands, art by bands, and links to YouTube concert videos]. When Pinterest sort of blew up, we tried to get on it as fast as possible and really explore to see what’s resonating.”
And, not surprisingly, there’s a “Threadless Loves Cats” board, full of pictures of cute cats. (On the Internet, cats are pure gold.)
The problem for CFOs, Nanna says, is that any monetary benefits derived from pinning are hard to track, at least so far. Pinterest doesn’t collect any sales data, and it doesn’t have any Facebook-like application protocol interfaces that allow businesses to retrieve and analyze user information or generate leads. Companies are left to “explore what’s resonating” on their own by following who’s pinning what and what products or services are trending. But Ahrens says she expects that will change when (or if) Pinterest figures out a way to make money. For now, says Nanna, he’s focused on solidifying Threadless’s presence on Pinterest and interacting with the company’s fans.
“It’s sort of tough to quantify the effect it’s having on Threadless,” he admits. “There’s been a slight uptick in traffic coming from Pinterest, but nowhere near what we see from Facebook and Twitter. I think it’s just important to keep our pins pretty fresh and fun for people to share, not really counting on the fact that they’re going to click through to the site.”
But if it’s hard to pinpoint direct evidence of Pinterest’s commercial impact, there are other, less direct but still compelling measures. In April Pinterest represented 17.4% of social-media revenue for e-commerce sites, a huge increase from the 1.2% credited to it in the second quarter of 2011, according to a small survey of 40 clients of tech marketing firm Convertro. Pinterest also reportedly generates more than four times as much revenue per click as Twitter, and 27% more revenue per click than Facebook, the survey said.
While this is a small sample, Tait Larson, head of finance for the popular wedding web site and magazine Style Me Pretty, says Pinterest has rapidly become its largest “social referrer.” Style Me Pretty’s five-year-old web site has more than 934,000 Pinterest users following one or more of its 56 wedding-themed Pinboards, and Larson credits Pinterest with introducing thousands of brides-to-be to the publication.
“We receive about twice the number of referrals from Pinterest than we do from Facebook, our second-largest social referrer,” Larson says. “I think this is because Pinterest is such a visual social tool and because brides are such visual consumers. For sites that contain less visually appealing content, there’s probably less to gain.”
Larson says it’s hard to quantify the effect Pinterest has had on actual revenue. To determine the marketing impact of Pinterest, the company focuses on tracking the volume of click-throughs, how many of its pages users look at, and how long they stay on the site. “For online sellers,” suggests Larson, “you could set up landing pages and track how users progress through a funnel, and really derive a value for each inbound Pinterest user.”
Pinterest in Action
A company can see who’s pinning what from its web site by typing www.pinterest.com/source/[your web site] into a browser. For CFOs, the experience can be enlightening. Sometimes, it can be painful.
“At a very basic level, retailers can see what items are popular or the preferred color of a certain product,” says Ahrens, referencing the transparency Pinterest affords. “This could inform stock ordering and even display merchandising. Where people are pinning multiple items to form a complete outfit or set of items, retailers could identify cross-selling opportunities.
“I guess it would also be distressing to see your products consistently appearing on ‘Things I Hate’ Pinboards, too.
“With all the information and content available on the web,” Ahrens continues, “visual data is making it easier for people to view, sort, and select the content they want. Pinterest reminds brands of the importance of visual imaging from marketing communications to design and user experience.”
Pinterest is popular now, but there’s no way of knowing if it will have the staying power of Twitter and Facebook. “In a time where every marketing dollar has to deliver, Pinterest is too unproven compared to other investments you should be making today,” says Ahrens.
But for the time being, Pinterest is giving the milk away for free. With the investment minimal, why not have a sip?