Pinterest Service Positioned to Become Advertising Platform

Pinterest users typically use the service for ideas, suggesting that they may be receptive to advertising and branding. In contrast, Google and Amazon users may already have chosen what they wish to purchase and use the sites for price comparisons. The number of Pinterest users continues to rise, and the service is positioned to become a money-making ad platform, gaining more attention from venture capitalists and retail companies.

In April, customers that were referred by Pinterest to online retailers spent $140 to $180 an order, according to RichRelevance, a technology company that tracks online traffic for retailers. This compares with customers from Facebook that spent $80 and those from Twitter that spent $60 per order.

In essence, Pinterest is an Internet shopping catalog where users can fill (“pin” to) their “boards” with images from Web pages of things they are interested in or wish to purchase. Since users are collecting their own content, they are typically more engaged and enthusiastic.

“The company’s venture-capital backers are certainly excited by its potential,” reports The Wall Street Journal. “Despite generating no revenue, Andreessen Horowitz, among others, gave the company a $2.5 billion valuation when Pinterest raised new equity financing this year.”

Although Pinterest does not disclose its user numbers, the company had 44 million unique visitors in the U.S. for July, according to comScore. Approximately half are using Pinterest on a mobile device.

The number of Pinterest users on its non-mobile site in the U.S. has decreased to 25 million since its peak of 30 million in January, comScore estimates.

This drop may be due to Pinterest’s mobile app, which is one of the top 100 most downloaded app for iPhones and Androids in the U.S. as of last year, according to App Annie, an analytics and market intelligence company. The decline in desktop use may also be due to the higher amount of women compared to men that use the site.

Companies such as J. Crew and Target are using Pinterest to showcase their products. “Retailers will want to pay to promote items in the feeds of Pinterest users who have expressed interest in similar ones,” notes WSJ. “That should make for a profitable business model and potentially lucrative public stock offering in a few years.”