Pinterest Joins the Social Media Superstars Case Study

Assignment Task

Pinterest was credited with increasing traffic by almost 400% to five specialty clothing retailers in 2011, but those retailers were paying Pinterest a percentage of each sale that originated from users' pin boards. According to TechCrunch, Pinterest dropped the Skimlinks program due to low revenues from the relationship.

The early demographics of Pinterest users [53] were different from those of the average technology early adopters:

• 28% had annual household incomes
• over $100,000.
• 50% had children.
• 68% were women.
• 49% were ages 25-44.

Marketers found the demographic of wealthy women, many of whom were responsible for household shopping and possibly pinning, sharing, and recommending products, irresist- ible. ComScore reported that users spent more money, bought more products, and executed transactions more frequently online than other social media buyers [54].

By March 2012 Pinterest had 20 million unique visitors [54] and was attracting pinners around the world. In April 2012 Pinterest had 1.3 million users in Latin America, with Brazil leading the pack with demographics similar to those of U.S. users [55]. However, the smaller base of U.K. pinners was about ten years younger, even wealthier, and more likely to be male. Pinterest in the United Kingdom was more about marketing, venture capital, and making money than the U.S. site, which re- sembled digital scrapbooking [56]. Clearly, the U.K. marketers had noticed the site before the average British mum [57].

Pinterest

The plan was to go global and by 2015 the brand was in over thirty countries. Pinterest was still most popular in the United States, but 45% of the site visits originated in other coun- tries. By 2015 the site had 100 million monthly users.

EMarketer was predicting that Pinterest would reach 30% of U.S. social network users by 2019, but the platform had still not gener- ated revenues above expenses for thebusi- ness. The plan was to make money through "buy buttons" that would run on the site. The goal was to locate potential customers who indicated their preferences for products and services by pinning them on their pages. Pinter- est had revenues of $25 million in 2014, but according to leaked documents was looking to grow revenue to $2.8 billion by 2018 [59]. Though companies like Etsy generated over 30% of its business from Pinterest, advertising was not reaching its potential for the firm[60].
Case Study: Pinterest Joins the Social Media Superstars.

One big concern was the copyright infringe- ment issue. The problem was that the images people pinned were often copyrighted content for which no one had given express permission to pin. At the time, the Digital Millennium Copy- right Act (1998) protected Pinterest from re- sponsibility for the pins of its users, but only the notion of "fair use" prevented those who owned copyrighted material from going after Pinterest's user base [48]. The doctrine of fair use meant that individuals could use small por- tions of copyrighted works for education, parody, or the creation of something new.

Committed Target Market

Consumers, particularly women 25-54, adopted Pinterest quickly. Exhibit 4.10 shows a chart of the adoption rates of Pinterest from May 2011 through June 2012 and the a minutes spent on the site per user [50]. Growth in unique U.S. users peaked in January 2013, declined a bit in February, and peaked again in April 2013, with 54,200,000 unique users in the United States. By January 2014 the monthly user base flattened, but growth began to pick up in new markets [51]. Pinterest users were spending about an hour a month on the site, which was shorter than the over six hours spent on Facebook.

Pinterest was generating revenue, but the profit model wasn't clear to the users. Origi- nally, Pinterest used Skimlinks to scan links posted on the site to determine whether or not the link led to a retail site. Pinterest made money by dropping a code on the site and collecting a percentage of sales from each. 

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