The potential for spending on online advertising is high. But banner ads have plateaued.
That's no surprise. Banner ads suck. "Sponsored" content isn't much better. Promised innovations have been disappointing. But, advertising could be something that helps both customer and seller.
Twitter will have an advertising business, ready in the near future, and available to partners.
Dick Costolo, Twitter CEO
It seems like Pintrest is uniquely qualified to build an advertising platform that users really will like. It could become is an organized database that maps products to the interested customers.
From it's inception, Pintrest has been the proverbial corkboard in a 16 year old girl's room. It's mostly personal notes and memories. Things the she likes or wants. It's because she shares what she wants, that Pintrest is in a place replace social coupon sites (e.g. Groupon).
Pintrest could examine all the products saved in their database, when that product reaches a critical mass, they can offer a coupon to all the users who have saved the product. Easy. Pintrest charges the seller a percentage of gross sales.
The dual viral effects of encouraging users to use Pintrest for the chance of a coupon, and the impetus to encourage more people to save the product are great for Pintrest. Sellers get qualified leads. Customers get a discount. Everyone wins.
The process looks like this: I save a link to a pair of shoes I want. So do 5000 other people. Pintrest calls up Nike and says, "we have a list of 5000 folks who all want your shoes." Nike gives them the green light, and they send an email to all their users with a 15% off coupon if they purchase the shoes over the next weekend. 20% if they buy online today.
Of course this is just the simple stuff. If I have a board of recipes, maybe I get a coupon for a common ingredient. Or maybe Pintrest looks at the things I've pinned, extrapolates based on similar people, and offers other products for me to pin.
The third iteration could look at the non-products I pin. Vacation pictures? Offer trips of similar distance to different areas. Lots of yoga pins? Offer yoga lessons.
Over time, Pintrest will get all kinds of interesting data to share will sellers: the average conversion rate of the people who have expressed interest in the product, other things their customers are interested in, etc…
There are some tough spots. Pintrest will not want to be a product site that spams its users with coupons. So, maybe these are once-weekly coupons that only come out on Thursday. Customers have through the weekend to use them, perhaps with a special bonus if they are used the same day.
Pintrest could offer coupons for pinning. That's worth a hell of a lot more than a like on a Facebook page — to both the company and the customer.
Of course, this isn't limited to Pintrest. Any social site could do this, it's just that Pintrest is in a unique position to make it happen.
Pintrest Introduces Banner Ads 19 Sept, 2013
Today, Pintrest announced that they'll start showing ads along with its normal content. Instead of offering users products they want, Pintrest is jumping ahead a step and offering products users might want.
They're doing this on a newly built recommendation system, which hasn't have the benefit of being tested against the simpler process of determining products users have already identified themselves as wanting. It's very likely, as with most recommendation systems, (especially new ones) that Pintrest's ads will, at least initially, be subpar.
I'm sure Pintrest will make money off their ads, but it's so unimaginative, so business-as-usual, that's it's strikingly disappointing.
Phase 1 complete! 5, Oct, 2013