Pinterest is aiming attract future stockholders by convincing marketing partners it can help them pin big profits with consumers.
The visual social media platform recently filed with the Securities and Exchange Commission for its upcoming initial public offering, outlining its vision and plan to succeed against much bigger competitors.
Pinterest, which launched in 2010, primarily makes money by attracting advertisers to its platform, where users create boards in which they self-identify their interests and through which advertisers can try and sell them products. Pinterest says its more than 250 million monthly active users have created more than 4 billion boards with a cumulative 175 billion pins saved. The platform itself has processed more than 2 billion searches, many of which Pinterest attempts to process visually using machine learning-based methods like object and image recognition.
Effectively, Pinterest competes not so much with Facebook or traditional e-commerce sites like Amazon, but with search engines and search-based product advertising tools, as well as with sites that manually or algorithmically curate products against which advertisers can run ads. “We primarily compete with consumer internet companies that are either tools (search, e-commerce) or media (newsfeeds, video, social networks),” Pinterest writes in its S-1 filing.
Though the company’s profits are still in the red, Pinterest reported smaller losses than other organizations launching IPOs, including Lyft.
Pinterest’s filing reported that the company had lost $63 million in 2018. But that was much narrower than a year earlier, when it lost $138 million.
At the same time, Pinterest is growing quickly. The company’s revenue, which came from advertising, totaled $756 million last year, up 60 percent from a year earlier. It listed a cash stockpile of $628 million.
Pinterest also said in the filing that it had 265 million monthly active users in the fourth quarter of 2018, compared with 216 million in the fourth quarter of 2017. Its number of users has grown steadily over the last two years, particularly as people outside the United States have begun to gravitate to its service.
Pinterest is where more than 250 million people around the world go to get inspiration for their lives. They come to discover ideas for just about anything you can imagine: daily activities like cooking dinner or deciding what to wear, major commitments like remodeling a house or training for a marathon, ongoing passions like fly fishing or fashion and milestone events like planning a wedding or a dream vacation.
… Pinterest is the productivity tool for planning your dreams. Dreaming and productivity may seem like polar opposites, but on Pinterest, inspiration enables action and dreams become reality. Visualizing the future helps bring it to life. In this way, Pinterest is unique. Most consumer internet companies are either tools (search, ecommerce) or media (newsfeeds, video, social networks). Pinterest is not a pure media channel, nor is it a pure utility. It’s a media-rich utility that satisfies both emotional and functional needs by solving a widespread consumer problem that is unaddressed by many other platforms. We call it discovery.
The online bulletin board plans to grow by making it easier for users, or pinners, as Pinterest calls them, to buy products. That would include making ads more relevant, expanding internationally, and using technologies like Lens, its visual recognition tool, to recommend more products.
“We plan to improve the utility of our service by making it easier for Pinners to go from inspiration to action,” the company said in its first public filing on Friday with regulators ahead of its planned initial public offering. “In particular, we want to make Pinterest more shoppable.”
The platform has a committed user base on which it can grow its plans for additional marketing offerings.
The average Pinner types roughly eight searches per month into Pinterest, mostly via her smartphone. But she spends most of her time on the platform scrolling through the array of “related pins” that appears after she has tapped on an initial pin. She is increasingly likely to be from somewhere outside the United States, though Pinterest makes 36 times as much money off Pinners in the US. There, Pinners are typically millennial mothers, who shop and spend more than the average US household.
Quartz reported that more than half of Pinterest’s monthly users are also weekly users. However, much of the platform’s growth is outside of the U.S.—which offers less revenue per user than those inside the U.S.
The number of Pinterest’s international monthly active users has tripled since the first quarter of 2016. Yet during the same time period, U.S. users only grew 20%.
… Pinterest’s collected $3.16 in revenue from each of its 82 million active U.S. users. But the company’s 184 million users overseas accounted for only nine cents of revenue each.
… [T]he vast bulk of Pinterest’s revenue comes from America, which made up about 94 percent of fourth quarter sales, and is still far more lucrative. A user in the United States was linked to an average of $9.04 in revenue, while the overseas figure was $0.25. Facebook, by contrast, gets about half of its ad revenue outside the United States and Canada. Still, its average revenue per user in that region is $34.86, about three times that of a user in Europe.
It could just be a matter of timing. Pinterest says it initially focused on sales in the United States and is now tackling other markets. But while digital advertising is increasing across the Atlantic, the traditional version is still dominant. Online spending was projected to increase by 3.6 percent in Europe in 2018, making up about 40 percent of the overall market, according to eMarketer. The region’s new privacy rules could also hinder efforts.
What do you think about the future of Pinterest, PR Daily readers? How do you think the platform’s offerings could affect your social media marketing strategies?