Recently, Facebook acquired Instagram, a mobile photo-sharing platform with over 30 million users, for $1 billion. The acquisition put some of the other social media companies under the spotlight as well. Palo Alto, CA-based Pinterest is one such company, which some believe has many potential suitors or a possible IPO in the waiting.
Pinterest is a scrap-book like social networking site that lets users create pinboards around events and themes to share photos among their friends. Development on Pinterest began in 2008 through co-founders Ben Silbermann and Paul Sciarra. The Pinterest closed beta was launched in March 2010 and post launch, the service amassed over 10,000 users within the first nine months. According to more recent data, the number of daily unique visitors to Pinterest grew from 2 million users in January to 4 million by March 2012. As of January 2012, the service had over 11 million users who can share their pinboards over other social networking sites including Facebook and Twitter.
Pinterest claims to be still searching for the right monetization model. For now, though, the company is generating revenues through successful implementation of an affiliate marketing model. Pinterest uses SkimLink’s services to identify if a photograph posted on the site can be linked to an affiliate program. Once a user clicks through the link and buys a product from the affiliated retailer’s site, Pinterest gets a share of the sale. While statistics are not available, analysts believe that Pinterest is driving plenty of traffic to retailers, especially the smaller ones. Niche businesses such as Wedding Chicks LLC, which provide wedding gifts, have told the Wall Street Journal how traffic from Pinterest converts to revenues.
Researcher, Convertro, estimates that Pinterest’s social media revenue share has grown from 1% in the second quarter last year to a projected 17% for the second quarter of this year. Converto goes on to predict that Pinterest will account for 40% of social media revenue by the end of the current year.
While Pinterest’s financials are not known, they have received $37 million in funding from private investors and VCs including FirstMark Capital and Bessemer Venture Partners. Their valuation estimates range significantly. While analysts at Business Insider believe that Pinterest may be worth $2 billion, others report that investors such as Sequoia and Benchmark may be looking at investing in the company at a $1 billion valuation.
Pinterest’s Impressive Statistics
Pinterest may not have amassed the kind of user base that Instagram had. However, their valuation estimates are based on the impressive user engagement statistics. According to social media analyst Maximize Social Media, an average consumer uses Pinterest for 89 minutes a month compared to the 21 minutes a month an average user spends on Twitter.
Experian Hitwise results reveal that Pinterest became the third most visited social network in the US in March 2012. Facebook is the leading player with seven billion total visits, followed at a distant second by Twitter’s 182 million visits. But, Pinterest is catching up with 104 million visits, already having surpassed Google+’s 61 million visits.
Pinterest’s Video Move
Recently, Pinterest extended its photo sharing capabilities by adding video sharing as well. The company enabled the addition of Vimeo videos on to its virtual pinboard. In 2011, Pinterest had introduced video sharing by letting users add YouTube videos on their boards. As a video service, Vimeo is preferred by the more serious and more design conscious crowd.
Analysts believe that many technology companies will be looking to acquire these impressive statistics for their own portfolios and Google is cited as a possible suitor. The acquisition will help Google get further into the social networking space through the deployment of an easy to use and an impressive photo sharing tool. Google has been trying to grow within social networking through Google+ which will benefit from an efficient photo sharing tool. Instagram attracted a $1 billion valuation even when they did not have a revenue model in place. Considering that Pinterest has figured out a steady source of revenues through affiliate marketing, they should be able to command a respectable valuation.