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C H A P T E R 1    T h e R e v o l u t i o n I s J u s t B e g i n n i n g


P i nt erest:
A Picture Is Worth a Thousand Words

L ike all successful e-commerce companies, Pinterest taps into a simple truth.
In Pinterest’s case, the simple truth is that people love to collect things, and
show off their collections to others. Founded in 2009 by Ben Silbermann,
Evan Sharp, and Paul Sciarra and launched in March 2010, Pinterest allows you to
create virtual scrapbooks of images, video, and other content that you “pin” (save) to a
virtual bulletin board or pin board. Categories range from Animals to Videos, with Food
& Drink, DIY & Crafts, Home Décor, and Women’s Fashion among the most popular. Find
something that you particularly like? In addition to “liking” and perhaps commenting on
it, you can re-pin it to your own board or follow a link back to the original source. Find
someone whose taste you admire or who shares your passions? You can follow one or
more of that pinner’s boards to keep track of everything she or he pins. As of October
2016, there were over 50 billion pins on Pinterest on more than 1 billion different boards.
Pinterest originally positioned itself as a social network. However, it has changed its
tune and now describes itself as a visual search tool for discovering and saving creative

© Blaize Pascall / Alamy

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ideas (and potential purchases), with less emphasis on sharing with friends. Search has
become the core part of its mission. It views Google, rather than Facebook, Twitter, or
Instagram, as its primary competition.
In October 2016, Pinterest has over 150 million monthly active members worldwide.
About 75% of those members are women, but men are its fastest growing demographic.
Pinterest is one of the “stickiest” sites on the Web, with women spending over 1.5 hours
(96 minutes) per session, and men about 1.25 hours (75 minutes). According to a survey
by the Pew Research Center, the percentage of online adults in the United States who use
Pinterest has more than doubled since 2012.
Over the past five years, investors such as well-known Silicon Valley venture capital
firms Andreessen Horowitz and Bessemer Venture Partners, hedge fund Valiant Capital
Partners, and Japanese e-commerce company Rakuten have poured over $1.3 billion in
venture capital into Pinterest, with its latest round of funding in May 2015 valuing the
company at $11 billion, more than double its 2014 valuation. Like Facebook, Twitter,
and many other startup companies, Pinterest focused initially on refining its product and
building its user base, but not surprisingly, its investors began to push it to begin generat-
ing revenue. Pinterest’s first step was to offer business accounts that provided additional
resources for brands. In 2013, it introduced Rich Pins, which allowed companies to embed
information, such as current pricing and availability, as well as a direct link to a product
page. In 2014, Pinterest took the official leap into the advertising arena, launching a
beta version of ads it called Promoted Pins that appear in search results and category
feeds. Around the same time, Pinterest also introduced a search engine, called Guided
Search, which suggests related terms to refine a search. Guided Search is based on user
metadata, such as board titles, captions, and comments related to pins, to create different
categories and subcategories. In January 2015, Pinterest further enhanced Guided Search
by allowing users to personalize search results based on gender.
In the last two years, Pinterest has gotten serious about monetization. In January
2015, it rolled out Promoted Pins to all its U.S.-based partners and in April 2016, began
offering them to advertisers in the United Kingdom, with additional English-speaking
countries expected to be added later in the year. In May 2015, it added Cinematic Pins, a
SOURCES: “As Pinterest Hits
made-for-mobile format. Cinematic Pins display a short animation when the user scrolls 150MM Actives, It’s Time to
down through the ad, and only play a full-length version when the user clicks on the ad, Re-Think Your Social Approach,” by
Allie Wassum, Huffingtonpost.com,
providing more user control over the experience. Pinterest also introduced new ad-targeting October 17, 2016; “Pinterest Starts
and pricing options. Advertisers can target users by interests, life stage, or “persona” such Expanding Its Visual Search Tools
to Video,” by Matthew Lynley,
as Millennial, prospective parent, or foodie. In June 2016, it added three additional ad- Techcrunch.com, August 4, 2016;
targeting options: custom list targeting (similar to Facebook’s Custom Audiences); visitor “Social’s Next Evolution? Pinterest
Begins to Monetize Users’ Search,”
targeting, which allows advertisers to retarget a customer who has visited the advertiser’s eMarketer, Inc., July 15, 2016;
website; and lookalike targeting, which enables advertisers to target consumers who “Amid IPO Speculation, Pinterest
Hangs a Target on Alphabet’s
share traits or behaviors with the advertiser’s existing customers. Ads can be purchased Back,” by John-Erik Koslosky, Fool.
on a pay-per-view, pay-per-click, cost-per-engagement (CPE), or cost-per-action (CPA) com, July 11, 2016; “Pinterest
Adds Features as It Looks to
model. Using the CPE model, advertisers only pay when a user engages with a pin, such Monetize 55 Million Active Users,”
as through re-pinning, and with the CPA model, only when the user clicks through to a by Emily Rolen, Thestreet.com, July
6, 2016; “Pinterest Updates
website and makes a purchase or downloads an app. As of 2016, there are more than Strategy, Looks to Scale Search and
1 million businesses on Pinterest, and over 10,000 different advertisers. During 2016, Audience Based Buying,” by

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46 C H A P T E R 1    T h e R e v o l u t i o n I s J u s t B e g i n n i n g

George Siefo, Adage.com, July 5, Pinterest plans to broaden its focus from retail and packaged goods to financial services,
2016; “Pinterest Doubles Down in
the Shopping Cart Wars,” by Thom travel, automotive, and fast food restaurants.
Forbes, Mediapost.com, June 29, Search advertising is the next frontier for Pinterest. Pinterest search differs from
2016; “Pinterest Hopes to Woo
Shoppers with Visual Search,” by other types of search because it is visual and typically happens at the early stages of a
Rachel Metz, MIT Technology person’s decision process. Users currently conduct over 2 billion keyword and 130 million
Review, June 28, 2016; “Pinterest
Makes a Major E-commerce Push,” visual searches per month on Pinterest. In July 2016, Pinterest began offering its search
by Zak Stambor, Internetretailer. inventory to advertisers for the first time and is reportedly working on the infrastructure
com, June 28, 2016; “Pinterest
Ramps Up Its Ad Targeting for keyword-based buying. Pinterest believes search advertising revenue can become a
Options,” by Zak Stambor, significant part of its business, and that it can challenge Google in the mobile search
Internetretailer.com, June 14,
2016; “Pinterest Renames ‘Pin It’ arena. It is making significant investments in search technology, such as deep-learning
Button as ‘Save’ in Push for Global assisted visual search, which will build on its existing visual search tool that allows users
Growth,” by Kathleen Chaykowski,
Forbes.com, June 2, 2016; to search within images on Pinterest. In August 2016, it began updating its visual search
“Pinterest Broadens Ad Sales Focus tools to work on videos and also began rolling out a fully integrated native video player
Once Again,” by Jack Marshall,
Wall Street Journal, May 2, 2016; similar to that offered by Facebook, along with video ads.
“Pinterest’s Plans for World Many analysts also believe that Pinterest will become a significant factor in the social
Domination,” by Lara O’Reilly,
Businessinsider.com, April 28, e-commerce arena. In June 2015, Pinterest launched Buyable Pins, which allow users to
2016; “Pinterest Is a Sleeping directly purchase products by clicking a blue Buy It button within the pin, for its iPhone
Giant – Don’t Underestimate It,”
by Madjumita Murgia, Telegraph. and iPad apps. Buyable Pins for Android devices were rolled out in November 2015, and in
co.uk, April 28, 2016; “Pinterest June 2016 finally reached the desktop. According to Pinterest, 10 million unique items are
Announces Complete Overhaul of
iOS App with Performance & Visual available for sale, from merchants both large (such as Macy’s, Nordstrom, Neiman Marcus,
Improvements,” by Chance Miller, Bloomingdale’s, and Wayfair) and small. Pinterest says its data shows that Buyable Pins
9to5mac.com, April 19, 2016;
“Pinterest Launches Promoted Pins are generating a significant percentage of brand-new customers for merchants. Pinterest
Internationally, Starting with the is significantly ahead of other social networks such as Facebook, Instagram, and Twitter in
U.K.,” by Paul Sawers, Venturebeat.
com, April 7, 2016; “Final Update terms of the percentage of users who use it to find or shop for products: 55% for Pinterest
on Boffoli Case Against Pinterest,” versus just 12% for Facebook and Instagram and 9% for Twitter. To further enhance its
Ipforthelittleguy.com, March 26,
2016; “Pinterest Sharpens Its lead, in 2016, it announced a number of other e-commerce-related initiatives, including
Visual Search Skills,” by Yoree Koh, Shopping with Pinterest, a shopping cart that links to a user’s account, is visible on all
Wall Street Journal, November 8,
2015; “Mobile Messaging and devices, can hold multiple items, and allows for checkout on any device.
Social Media 2015,” by Maeve The fact that Pinterest launched Buyable Pins on its iOS mobile platform rather than
Duggan, Pewinternet.org, August
19, 2015; “In Lawsuit Against the desktop is just one indication of how important the mobile platform is to Pinterest.
Pinterest, Artist Continues a Pinterest provides apps for iPhone, iPad, Android, and Windows Phone, as well as a
Crusade for Copyright on the
Internet,” by Kate Lucas, Gross- mobile version of its website using HTML5. Pinterest Mobile runs inside the smartphone’s
manllp.com, July 23, 2015; “With browser rather than as a stand-alone program. Mobile has been a huge success for
Buyable Pins, Pinterest Lets You
Buy Stuff Right in the App,” by JP Pinterest, with 80% of its traffic coming from mobile devices in 2016. Pinterest releases
Mangalindan, Mashable.com, June new versions of its mobile apps on a regular basis, and in April 2016 launched a nearly
2, 2015; “Why $11 Billion
Pinterest Thinks It Has the ‘Best completely written iOS app that allows the home page to load much more quickly, scales
Kind of Business Model’,” by Jillian to the different number of iOS screens more efficiently, and is readable in all 31 languages
D’Onfrio, Businessinsider.com, May
19, 2015; “Pinterest Doubles in which Pinterest is available. According to Pinterest co-founder Evan Sharp, the smart-
Down on Making Money, Rolls Out phone is the platform Pinterest focuses on when it develops new features and products.
Video Ads,” by JP Mangalindan,
Mashable.com, May 19, 2015; International expansion continues to be a major area of focus. Pinterest introduced
“Pinterest Puts Its Own Spin on its first localized site, for the United Kingdom in May 2013, and it is now available in 31
Video Ads with These Cinematic
Pins,” by Garret Sloane, different languages. Pinterest is aiming to make its platform feel more regional, focusing
Adweek.com, May 19, 2015; “How specifically on the United Kingdom, France, Germany, Japan, and Brazil. In 2016, for the
Pinterest Plans to Spend Its New
first time, more than 50% of its monthly active users are located outside of the United

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States. Looking to the future, Pinterest believes that international expansion will provide Millions and Why It Only Hires Nice
Employees, According to Its
it with the greatest growth opportunities. Cofounder,” by Jillian D’Onfrio,
Despite all the good news for Pinterest, there are some issues lurking just behind the Businessinsider.com, May 11,
2015; “Pinterest Beefs Up Security
scenes that may cloud its future, such as the issue of copyright infringement. The basis of with Full HTTPS Support and Bug
Pinterest’s business model involves users potentially violating others’ copyrights by posting Bounty Program,” by Jordan Novet,
Venturebeat.com, March 13, 2015;
images without permission and/or attribution. Although Pinterest’s Terms of Service puts the “Fighting Spam at Pinterest,”
onus on its users to avoid doing so, the site knowingly facilitates such actions by, for example, Engineering.pinterest.com,
February 20, 2015; “Pinterest Goes
providing a Pin It tool embedded in the user’s browser toolbar. Much content on the site After the Male Demographic with
reportedly violates its Terms of Service. Pinterest has provided an opt-out code to enable other Debut of New Search Filters,” by
Sarah Perez, Techcrunch.com,
sites to bar its content from being shared on Pinterest, but some question why they should January 23, 2015; “Pinterest
have to take action when Pinterest is creating the problem. Another thing Pinterest has done Becomes More Search Engine-Like
with the Launch of Guided Search
to try to ameliorate the problem is to automatically add citations (attribution) to content on the Web,” by Sarah Perez,
coming from certain specified sources, such as Flickr, YouTube, Vimeo, Etsy, Kickstarter, Techcrunch.com, June 11,
2014;“Pinterest Tests Do-It-
and SlideShare, among others. In 2013, it entered into an agreement with Getty Images in Yourself Promoted Pins for Small
which it agreed to provide attribution for Getty content and pay Getty a fee. Pinterest says it and Medium-Sized Businesses,” by
Ryan Lawler, Techcrunch.com, June
complies with the Digital Millennium Copyright Act, which requires sites to remove images 5, 2014; “Can Pinterest Be Found
that violate copyright, but this too requires the copyright holder to be proactive and take in Translation,” by Sarah Frier,
Businessweek.com, May 22, 2014;
action to demand the images be removed. Christopher Boffoli, a well-known photographer, “Pinterest’s Next Big Move: A
filed a federal lawsuit against Pinterest in late 2014 alleging that Pinterest users used his Clever New Take on Search,” by
Kyle VanHemert, Wired.com, April
photographs without his permission and that Pinterest failed to take adequate measures to 24, 2014; “Paying for Pin-Ups,” by
remove them. In September 2015, Boffoli agreed to dismiss the case, presumably as part of Sarah Laskow, Columbia Jour-
nalism Review, November 7, 2013;
a confidential settlement with Pinterest, leaving the legal issues raised unresolved. “Pinning Down Pinterest:
Pinterest is also not immune to the spam and scams that plague many e-commerce Addressing Copyright and Other IP
Issues,” by Jennifer L. Barry,
initiatives. Security analysts believe Pinterest will have to adapt its systems to deal with Lexology.com, October 22, 2013;
scammers and warn users to be wary of requests to pin content before viewing it and to “Pinterest (Officially) Jumps the
Pond,” by Zak Stambor, Internetre-
be suspicious of “free” offers, surveys, and links with questionable titles. Pinterest has tailer.com, May 10, 2013;
acknowledged the problem and has promised to improve its technology. In 2015, for in- “Pinterest Gives Copyright Credit
to Etsy, Kickstarter, SoundCloud,”
stance, Pinterest migrated its website to the HTTPS protocol, which provides more security by Sarah Kessler, Mashable.com,
than the more common HTTP protocol typically used to access web pages. Pinterest also July 19, 2012; “A Site That Aims to
Unleash the Scrapbook Maker in
employs a system known as Stingray that enables it to quickly react to spam and other All of Us,” by Jenna Wortham, New
types of malicious behavior, and has created a program that pays a bounty to white hat York Times, March 11, 2012;
“Pinterest Releases Optional Code
hackers who discover security issues. to Prevent Unwanted Image
At the moment, however, the future looks very bright for Pinterest as it reportedly Sharing,” by Andrew Webster,
Theverge.com, February 20, 2012;
gears up for an initial public offering in the near future. Although it may encounter some “A Scrapbook on the Web Catches
growing pains in the process of implementing its new business model, it has the potential Fire,” by David Pogue, New York
Times, February 15, 2012.
to generate significant revenue based on advertising and social e-commerce.

Case Study Questions

1. Why does Pinterest view Google as its primary competitor?

2. Why does Pinterest focus on the smartphone platform when it develops new
features and products?
3. Why is copyright infringement a potential issue for Pinterest?

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