Pinterest is a free website, that requires registration to use, and acts as a way to search the internet and save content, as pins on their boards, on a personalized media platform.
Pinterest does not generate its own content, but takes information from other websites and compiles it via images in one place that can be easily searched and categorized. You can also send this content to other individuals, both current users of Pinterest and non-users, via e-mail. Pinterest users can follow friends, or others that they think have similar tastes – by following individuals or a specific board.
Users of Pinterest help to organize the website and categorize its search function, as well as generate more content. One of the most followed boards is called ‘Popular,’ which compiles all the information that users ‘re-pinned’ the most in one board.
The network effect
Pinterest needed a direct network effect to help build up its user base. The more users it had, the more content that was generated, the more attractive the platform was to new users
A network effect also led to increased awareness. Other content websites feel the pressure to add Pinterest as part of their social media sharing link icons link, right next to facebook and twitter. This acted as endorsement, legitimizing the website, as well as creating an easy button to add new content (the bread and butter) to the platform.
Like most platforms, Pinterest had a bias to a particular demographic. Pinterest’s following consists of about 70% women, although this varies by country. Having a strong skew to a particular demographic is actually a powerful tool for a platform that relies on networks. The content was more tailored to these individuals, and helped to drive an increased user base due to heightened relevance.
Pinterest was active for over 5 years before it monetized. It did not need to. It has millions of followers, and was one of the fastest growing social media sites in the world. In 2007, Pinterest raised $37 million. In 2012, comScore reported that the site had 11.7 million unique users in the USA alone, and was the fastest site to ever break through the 10 million unique visitors. In 2013, Pinterest had 70 million users worldwide.
Finally, in 2014, the site finally began to monetize. Through the use of selling data to marketers, based on the information it collected from users and their interaction with the site, and allowing companies to create boards to promote their content. Later in the year companies could create pins to help advertise their products.
The waiting game paid off. When Pinterest did finally start to monetize, they were adding more value to their paying subscribers than other social media sites. In one case study of a fashion website, users visiting from Pinterest spent $180 compared to $85 spent from users coming from Facebook. There are more studies that also reveal that Pinterest is more effective at driving sales than other forms of social media.
In May 2015, Fortune Magazine listed Pinterest in the 8th position on its Unicorn List, which ranks startups that have a valuation exceeding $1 billion. In June 2015, Pinterest added the “Buy” button to its mobile app. Michael Pachter, an analyst at Wedbush Securities, estimated that Pinterest could generate as much as $500 million in 2016 through paid advertisement.
Time will tell if this social media platform can keep their user base engaged, but its strategy of free sign ups, sticking with a specific user demographic, and gradually adding in monetization tools once the site had reached almost 100 million users world wide, seems to have paid off.