Pinterest may be rewriting some of the new rules of online marketing.
While advertising on the platform is still in its infancy versus competitive sites such as Facebook, Twitter and Instagram and companies need to figure out what works best for their organizations, Pinterest already has signed up some major fashion and retail brands in the year since it unveiled Rich Pins including Target, Gap, J. Crew and Nordstrom. The five-year-old platform is home to 50 billion pins that live on more than one billion boards, with two million people pinning product Rich Pins each day.
According to industry experts, the discovery platform is a powerful referral tool, driving high percentages of traffic back to brands’ digital flagships — and both Promoted and Rich Pins appear to be accelerating this.
Rich Pins, not to be confused with Promoted Pins — the platform’s mode of advertising that was introduced in beta testing last May — are actually free for businesses. They are just pins that contain detailed product information, from real-time pricing to availability and where to buy an item.
But if a brand really wants to boost its reach on the site, it has to pay for Promoted Pins. After seven months in beta testing, the product opened up to all advertisers on Jan. 1. There are two pricing models: a CPM, or cost per impression model, that is typically based on generating brand awareness, and a CPC, or cost per click model, that’s more targeted for businesses wanting to drive clicks and conversion.
Both types of pins can drive a return on investment for brands, experts say. While advertisers have to pay to play in order to amplify their pins on a large scale, Rich Pins have the benefit of eliciting engagement and driving an action without the added cost.
While Pinterest still lacks the audience of Facebook or the aspirational feel of Instagram, it does have a specific purpose that its peers don’t: it’s a discovery platform where millions of users come to view others’ pins. While social commerce on sites such as Facebook has failed to meet retailers’ expectations because people are coming to them to interact with friends or brands, and not necessarily to shop, the digital scrapbooking element of Pinterest could have better luck driving sales because of its event focus: Decorating a room, or planning a dinner party or a wedding.
Target uses both Promoted and Rich Pins, according to Kristi Argyilan, senior vice president of media and guest engagement at the discounter, who noted this combined marketing approach doubled Pinterest-referred traffic to target.com in 2014, year-over-year.
Rich and Promoted Pins are not mutually exclusive, according to Target. A Rich Pin means the pin pulls through item data such as name, price and availability from target.com. A Promoted Pin means Target is paying for the pin to get it viewed by more people. Nearly all of Target’s Promoted Pins are Rich Pins. Pinterest also recommends that a pin is rich before promoting, since Rich Pins pull through an additional Target logo and help to maintain the branding as it is pinned further downstream.
Nordstrom, which has more than 4.4 million fans on Pinterest and started using Rich Pins about a year ago, said the largest customer-driven activity to nordstrom.com comes from Pinterest.
“The way that people use Pinterest is very product-focused, and as a retailer we hope they will shop with us because of the breadth of products [on the platform],” said Bryan Galipeau, Nordstrom social media director, adding that the brand sees about 150,000 pins coming from its Web site per month. The company said it hasn’t done any Promoted Pins yet, but it is constantly evaluating the opportunity.
British women’s and men’s wear brand Reiss contended that Pinterest fueled the highest average order value from any social channel last year. Since partnering with the platform in a marketing capacity, the brand has experienced a 46 percent jump in Pinterest-referred revenue.
Reiss’ Rich Pins notified users when prices dropped on a pinned product — and the brand said it’s seen a tangible return on investment from its efforts on Pinterest thus far. For instance, the brand saw a 22 percent increase in traffic to its site and a 24 percent lift in revenue, as well as higher individual order values. The company attributed 55 percent and 46 percent increases in transaction and revenue, respectively, directly to Pinterest, year-over-year.
Although Pinterest has definitely been late to join the advertising game — contemporaries like Facebook and Twitter have both been working with marketers for several years now and generating substantial revenues as a result — the platform is making an aggressive push. Pinterest has raised upward of $790 million in the past year-and-a-half alone, or a total of $1.1 billion. With a company valuation of $11 billion after its latest round of funding last month, Pinterest is readying to focus on creating a meaningful revenue stream.
Pinterest’s investors clearly need to see a consistent revenue stream to confirm their hopes of a return on their investment. But all they have to do is look at Facebook: The social network racked up $3.59 billion in advertising dollars in the fourth quarter of last year (a 53 percent leap from the same time in 2013). Sixty-nine percent, or $2.5 billion, of Facebook’s ad revenue comes from mobile — and based on this, the 80 percent of Pinterest users who access the platform from a mobile device can be a massive opportunity for marketers.
Kevin Knight, head of agency and brand strategy at Pinterest, said brands that implement Rich Pins on average see a double-digit increase in click-through rates versus those that don’t. And on the paid side, he said the draw here is that 30 percent of the total impressions that result from a Promoted Pin are free downstream, meaning the brand is racking up free impressions every time the image is re-pinned.
He’s spent the past year working closely with brands through a series of creative workshops to help them get the most out of their presence on the platform, but the most surprising thing he’s discovered is that what resonates with Promoted Pins is the opposite of what typically works on other social networks.
“The biggest factor that drives the success of a pin is how helpful the pin is,” Knight said. “It’s the actionable details.”
For example, Knight found that the notion of a Promoted Pin blending in with organic content is not what results in a high-performing pin. In fact, the exact opposite is true — and when a pin includes branding and a logo, it actually performs better, according to Knight. This has been the case with publications like GQ as well as big-box retailers like Target.
It goes against what experts deem best practices — and the notion that consumers don’t want such in-your-face ads. They do on Pinterest, apparently. Less is not more on Pinterest, Knight said. The more detail a pin has, the better it will perform. While some brands still stick to a purely visual approach when pinning — because this is what’s been successful on places like Instagram — this approach is not what he recommends on Pinterest.
“We’ve done a lot of work with Target, [and] in a tasteful way they will put the bull’s-eye [logo] on something,” Knight said. “The presence of a Gap logo or a bull’s-eye actually communicates to a consumer that it’s affordable and accessible. Fashion is a big thing on Pinterest, but people want to apply it in their lives. The accessibility of a lot of these brands resonates [with pinners].”