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Pinning the Interest: The value of Pinterest

May 18 2014, 6:10pm CDT | by , in News | Technology News

Pinning the Interest: The value of Pinterest
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Is Pinterest really worth $5 billion?

After raising $200 million this week, photo-based Pinterest reached a value of $5 billion with $764 million from investment funding. The question around the internet and business world is why Pinterest seems to be the next big thing. "Business Insider"’s Jillian D'Onfro offers a breakdown of the company’s worth.

Ask most people on the internet what Pinterest is and you’ll receive a demonstration without real explanation. All a user must do is simply click ‘Pin It’ button on the website, or any bookmarklets found on linked outside sites, and that’s Pinterest. But the website functions on a higher level: Pinterest rules the social media ad market with higher values than Twitter and Facebook. The website drives 7.10% of web traffic, which is more than either Reddit or Twitter, while additionally increasing sales offline by 21%. 

In just six months, 70 million Pinterest users and 30 billion pins shows a 50% increase in usage. 

Increases like that earn major companies attention.

Pinterest’s latest marketing with businesses, promoting pin-ads through user interests, works with recent acquisition VisualGraph. Marketers are required to commit to $1 million and $2 million per commitment, which is more than Facebook charges. Home improvement chain Lowe’s account is the largest on the site with 3.4 million followers. And major brands like Old Navy and Nestle are willing to pay for the option to communicate with a new audience, both through visual and text.

And targeting based on visual aspiration offers an increase in traffic as well. Invasive marketing is a common complaint among users of social media. Thanks to the ability to personally customize what a user likes, the marketing does not feel invasive. Invasive marketing is a common complaint among users of social media and free downloaded apps.

In fact, the company created a Guided Search to narrow down results since 75% of Pinterest traffic comes from mobile technology (cellphones and tablets). Instead of killing a user’s bandwidth, the search limits the options to categories opposed to the usual cascading popular pins found on the website.  The lack of cascading images helps in customizing the experience and marketing without diluting the functionality.

Unlike some of the biggest social media companies experiences, the predominately female base increases usage year-to-year. Advertisers typically target women since they make majority of family decisions on daily purchases (around 85%) and are more than likely to purchase through pinning. Proactive women pin items through a variety of means, including an unofficial Pinterest bookmarklet. Etsy, one of the most popular e-commerce sites, only earns 8% of official ‘Pin It’ button while 67% come from the bookmarklets. 

 

The easy pinning ability offers busy women the chance to save an item for closer inspection later. In a mobile world, advertisers may find the customer access worth the investment of a couple million dollars. 

 

Source: Here's Exactly Why Pinterest Is Worth Its $5 Billion Valuation

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