January 23, 2014
Since its launch in 2010, Pinterest has quickly transformed from a quirky website into a social media base used by one-fifth of American adults. To continue nurturing this growth, Pinterest CEO Ben Silbermann has announced a new business model that will finally start to generate revenue. Pinterest plans to charge advertisers for promoting their products on the site. An analyst at Wedbush Securities believes this has the potential to earn Pinterest more than $500 million in 2016.
According to The Wall Street Journal, Silbermann left his job at Google in 2008 to co-found Pinterest with a former classmate from Yale. Since Pinterest has been valued at $3.8 billion, has over 240 employees, and $564 million in funding from venture capitalists, Silbermann has a lot of pressure to start generating revenue.
This new advertising on Pinterest involves “promoted pins” which are used in a similar way as normal pins. The promoted pins are paid for by advertisers to show up on a user’s homepage. Users are able to interact, re-pin, and share these objects in the same way as other items on Pinterest.
Silbermann says that the point of this advertising is allowing customers to discover things that they want. For Pinterest, this could mean a service a customer uses at some point, or a product that they purchase.
“If you look at the most successful [Web] companies, they really found a great intersection between what people are there to do and what advertisers want to do,” Silbermann told WSJ.