And so it starts. First, with a toe in the water . Soon it will be the whole body.
Image based social media site Pinterest has just officially announced it’s debut in monetizing its platform via advertising. Similar to Instagram, it is laced with the words “test” and “beta” everywhere and there is a good reason for that. Like Instagram, Pinterest has a massive source of users ( 34.9 million uniques/month) accustomed to an ad-free environment. They feel, similar to all social media users, that they have created the space they visit every day by adding, liking and repinning . Any intrusion of advertising feels as a rupture of confidence and invasion of a third-party bully in a space they feel they own. If trust is broken, users might flee and that will be the end of the platform.
So, it is with careful baby steps that they initiate a testing of the waters to its predominantly female users ( 92% of their users are women). First, it is promoted pins. That means none of the images currently shared are being touched. Not only would it create massive copyright headaches, it would also deeply entrench in users feeling of property. Promoted allows for the brand to use their own wholly licensed and owned content in a separate pin. And separation is also key. It will not sneak into a friend’s board and feel sneaky but rather openly declare itself as and ad.
Why so expensive ?
Second, they are extremely expensive. At between $1 million and $2 million per campaign( $30/$40 per CPM), these ads shoot right up to the top of the market in territories hardly seen. In comparison, according to a Salesforce study, Facebook Sponsored Page “Like” Stories are selling at a CPM (or cost per thousand readers) of $4.58 ( there are no available numbers for Instagram) . There is also good reasons for that high cost. Pinterest wants only top brands to participate and only the richest one can pay such a price. Top brands means classier ads and classier ads means higher approval rates. Second, the first ads, like with Instagram, will generate a lot of buzz in the media and other sites. Pinterest wants a cut of that too. Finally, it is easier to lower pricing than increase it. We can expect fluctuation of the pricing based on the return data.
Reach or conversion
Instagram, who also used the sponsored photo approach , showed impressive result in reach. According to Mashable, Levi’s reach an audience 49 time bigger than their pool of followers and increase those 20%. That is good if reach is your only goal. But unlike Instagram, Pinterest has a built in click-through tool built in the platform since each pin refers back to an originating website. Ads on Pinterest can easily lead to sales conversions only a few clicks away, something Instagram cannot yet deliver. Also, Pinterest has a much better defined and more interesting audience for most brands ( 25- to 54-year-old women interested in buying things) .
I take that back
For now, companies like Kraft, General Mills, Ziploc, Nestle, Lululemon, Gap, ABC Family and Expedia are already lined up. Next step will be pouring through the data, as well as scanning media and comments section, for any indication of success or failure. Because in social media, even good conversion numbers cannot save users defection. It’s a careful balance. This is when the words “test” and “beta” become the most useful.
Author: Paul Melcher
Paul Melcher is the founder of Kaptur and Managing Director of Melcher System, a consultancy for visual technology firms. He is an entrepreneur, advisor, and consultant with a rich background in visual tech, content licensing, business strategy, and technology with more than 20 years experience in developing world-renowned photo-based companies with already two successful exits.