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January 22, 2014

Pinterest Eager to Move to Generating Revenue in New Plan

Pinterest, as companies go, hasn't exactly been around for a long time. It's been just under four years for the company, but it's gained a whole lot of ground in that time. Now being used by around one in every five adults in the United States, Pinterest went from scrapbooking tool to social media darling. Now, it's looking at the next major plateau for a business: realizing revenue and turning a profit. Pinterest's CEO Ben Silbermann has a plan to do just that, and it all starts, not too surprisingly, with advertising.

Reports suggest that just bringing advertising to Pinterest could generate $500 million by 2016, according to word from Wedbush Securities' Michael Pachter. That's good by most any stretch of the imagination, and would be just the kind of thing that helps validate the earlier valuations of $3.8 billion the company is reportedly working under. What's more, venture capitalists have already kicked in $564 million at last report, and the company currently has 240 employees to its credit, so getting in a cash flow is likely going to be helpful.

Pinterest's new plan, according to Silbermann, involves the promoted pin system and some expansion in that vein. With promoted pins, users do still interact with the pins in the same way, but with the critical difference that the pins in question get more highlighting than normal. Silbermann and Pinterest have discovered that, when it comes to advertising, advertisers are eager to get products and services noticed. But Silbermann is doing something a little different with this route, as he describes the promoted pins system as “not purely transactional” in an interview with The Wall Street Journal.

“Pinterest from the beginning was not meant to be a shopping service,” said Silbermann in the interview. “It was meant to be a service about your future and your interests. Obviously, products and services are a subset of that. But that's not the full scope of it.”

It's increasingly harder to get products and services noticed in a society where toning out advertising by any of a number of means from technological to psychological, a development that Microsoft recently noticed in trying to get interest for the Xbox One by offering bonuses for product placement with Machinima video makers. But by like token, will advertisers be interested in an advertising product that seemingly by definition isn't allowing for urgent calls to action or ways to make purchases directly? But if every advertiser is screaming at the top of its lungs to buy this or buy that or shop here, then that could be a part of what's getting people interested in getting around ads. Product placement seems to be helping on that front—it's impossible to skip around or ignore without blocking out the content itself—but it's also much less obtrusive. Showing a can of Coke or a Domino's Pizza isn't the same as urging the consumer to buy now, but that sight may be enough to fuel a buying decision down the line. But access to the massive Pinterest pool may prove too tempting to keep advertisers away in droves.

Only time will tell how well Pinterest's plans work, but a kinder, gentler form of advertising may well be on tap in the future, and Pinterest could well be poised to lead the way. Advertisers need to innovate just as much as any other business, and that innovation could look a lot like promoted pins.

Edited by Cassandra Tucker

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