In the race to cash in on their huge user bases, Pinterest is getting shoppable and Instagram is opening itself up to more advertising.
While Pinterest is beating Instagram to the punch as the first of the two to implement a buy button, both are operating on the same advertising-based revenue model since the pinning platform is not taking a cut of the sales it generates. The new competition for ad dollars marks another challenge for the publishing industry, where fashion magazines are seeking fresh ways to boost revenues.
For now, it’s Pinterest’s move toward shopping that’s garnering the most excitement in the fashion sphere, particularly since its seen as the place people go when they’re in the mind to spend and because brands and retailers will be able to control the checkout process.
The discovery platform plans to introduce “Buyable Pins” by the end of the month, making more than two million products on its site instantly shoppable. That effectively opens the doors of a gigantic new digital mall, although only time will tell if shoppers actually spend there. The buy feature is a mobile-only function that will be available on Pinterest’s iPhone and iPad apps and will allow users to transact without leaving pins.
Pinterest, home to upward of 50 billion pins, is launching the program with a series of partners, including Macy’s, Neiman Marcus and Nordstrom, which worked directly with the platform to incorporate the technology. E-commerce provider Demandware also plans to include its clients such as Cole Haan, Kate Spade, Jo-Ann Fabric and Craft, Michael’s, Gardener’s Supply Company and Ethan Allen.
Additionally, Shopify — an e-commerce software provider that works with 165,000 merchants — is helping what Pinterest expects to be thousands of small-to-medium businesses implement the buy button in the next few weeks, according to Sarah Hoople Shere, who leads product marketing for commerce at Pinterest.
“Our hope is that if we’re truly driving incremental sales, retailers will choose to promote these pins to get even greater distribution. Then they can bring more of their content to Pinterest — and these products will get re-pinned,” she explained of the decision for Pinterest not to take a cut of sales influenced by the site.
The ability to buy from a Pinterest board — versus having to click over to a brand’s site or app to purchase — quickens the path to purchase. The fewer steps there are, the greater the chance that a consumer will buy. Brands also own the end-to-end purchase process, unlike when they wholesale products to third-party e-commerce sites, which then handle shipping, logistics, customer service and so on. For instance, when a Pinterest user clicks on a Cole Haan shoe and decides to buy that item, Cole Haan handles the entire process, keeping the consumer the entire time.
“Our audience is forward-looking; they are using Pinterest to plan for their future, vacations or products they want to buy. Since that behavior is happening already, making those products buyable on the app is intuitive,” Shere said, adding that historically, having a “buy” button has been the most-requested feature from marketers and pinners alike. She cited data released a few weeks ago that showed 87 percent of Pinterest users have purchased products because of pinning platform. “The hope is that retailers getting high traffic and conversion will now enable ‘Buyable Pins’ to increase mobile conversion rates and drive incremental sales.”
Shere said she’s not worried that this will shift Pinterest’s foundation from discovery to shopping platform. It’s always been about “discover, save, do,” she said of the company’s mission. To her, making the pins actionable is just another way to fulfill on the platform’s “do” pillar.
And all of this “doing,” or purchasing power, has enormous implications for marketers, who will now have a more tangible way to track return on investment on Pinterest.
Instagram, the Facebook-owned image- and video-sharing platform that has steered clear of instituting any buying functionality, also made a move in a more commercial direction this week, with plans to unveil new formats open to all advertisers. Instagram rolled out its first ad, with Michael Kors, in late 2013, but has been slower to roll out sponsored content than other sites in an effort to preserve the organic feel of its feed.
The company also said these ads, which will be opened up to marketers this year, will contain tools that not only result in more-focused targeting, but will hopefully drive more conversions. Fashion brands such as Burberry, Macy’s, Victoria’s Secret, Ralph Lauren and Banana Republic have already taken to advertising on Instagram.
The race among social media sites to monetize their users is giving brands new options to experiment with as they court shoppers digitally.
Shere said Pinterest’s Buyable Pin option is free for merchants and pinners. She maintained that, similar to Instagram, Promoted Pins — or sponsored content — would continue to generate the company’s revenues.
The two platforms have fundamental differences, though, especially when it comes to user behavior. The majority of Pinterest’s content comes from brands directly, whereas Instagram’s feed definitely has a more user generated feel. In addition to celebrities, influencers and brands, users aggressively follow and engage with friends and family on Instagram, and like Facebook, Instagram is a place where interaction between the communities is among the platform’s defining characteristics. Pinterest is less about interaction among peers and more focused on a user’s interests and what people and products might inspire them and ultimately lead to a purchase.
Adam Forrest, Demandware’s senior director of marketing for the Americas, said Pinterest is primed for commerce because it’s all about the user. Comparing Pinterest’s foray into commerce to that of Facebook’s, which was a flop, he noted that Pinterest is essentially a virtual wish list. It’s the person who owns the boards and they are collecting the clothing, collectibles and housewares that they want or desire.
Forrest said the discovery network is able to “capture that moment when people are emotionally invested with high intent to purchase,” something that’s harder for competing social platforms such as Facebook, Instagram or Twitter.
Josh Krepon, Cole Haan’s vice president of global e-commerce said even though Pinterest tends to get grouped in the social media space, the brand considers Pinterest a discovery engine. Cole Haan thinks of it as a personal experience, versus how it looks at its presence on other social mediums.
Krepon said Pinterest was the “ultimate wish list” and that it only makes sense that a “buy” button will now be associated with this.
Callan Green, director of digital strategy at firm 7th & Wit, which specializes in social media, said clients that have been testing Promoted Pins for the past few months are seeing more significant return on investment than from social mediums.
These advertisers are spending less on Pinterest than they are on Facebook, Green explained, and the conversion per spend is higher on Pinterest. Even though the latter has about one fifth of the users than Instagram does, she insisted that the discovery platform has become a place where the desire to buy is innate.
“That’s why this button is so key. People are already there in the mind-set to buy, while that’s not necessarily true of other platforms,” she said. “Ultimately, you’re on Facebook to connect with family and friends. Can you drive sales? Absolutely. However, it’s not the innate use case of the platform.”
Mary Beech, chief marketing officer at Kate Spade & Company, said Pinterest is the brand’s number-two social platform in terms of driving traffic to its e-commerce site at katespade.com — after Facebook.
“The link back to commerce is something we tracked but it was difficult,” Beech said of measuring ROI from Pinterest to date. “Last year we added the ability to pin something from our Web site and this is the opposite direction.”
Yory Wurmser, a retail analyst at eMarketer, said Pinterest’s buy button is the next leg of the platform’s journey towards commercialization.
Retailers have been “eagerly waiting for this buy button,” he said.
Like Green, Wurmser noted that even though Instagram’s number of users dwarves that of Pinterest, the users on Pinterest are more intensely focused on what they want to do or buy in the future. He called the site a “future-oriented map” that has yet to be matched anywhere else.
“There’s [been] an implicit notification to retailers that there’s a strong interest to buy [an item that is pinned] in the near future,” Wurmser added, likening Pinterest to a search engine.
Pinterest, however, differs from search in at least one important way: it’s a process not totally driven by consumers since brands play a part in what can be pinned.
And that could make the platform and its move toward commerce all the more important for brands looking to catch consumers while they’re thinking of buying.