Pinterest to Launch Self-Serve Advertising Auction

Not only is it fascinating that Pinterest has just recently launched paid advertising campaigns, but also its future advertising strategy seems rather intriguing.  As an interface, Pinterest is almost solely based on “other people/company’s goods”.  It is the user that aggregates looks, styles, themes and motifs based on he/she’s own creativity and breadth of the market.  It seems only logical that Pinterest should be profiting from advertising sales since a majority of the items posted can be found online somewhere.  Even with the search tool, you would think Pinterest would have “cashed in” long ago on the potential use of banner ads or search displays.   
 

The Company's go-forward advertising strategy seems like a fitting and somewhat unique plan.  The Company is planning on implementing a self-serve auction which will be based on a pay-per-click system rather than a click-per-thousand impressions plan.  This auction is targeting small to medium sized businesses, rather than large consumer giants, such as Kraft, Nestle, Gap or General Mills.  The Pinterest users are everyday people as well as small to medium sized businesses, so it makes sense that these businesses would be the ones able to bid for advertising space.  Users create pages based on a range of interests, while usually giving credit to the products included in their montage.  The application is a way for users to share their creativity and design ideas from content already out there.  If there are medium sized companies that have a large amount of products pinned by specific users, those companies should be able to advertise right alongside those boards. 

The auction seems somewhat contrarian to the digital marketing of today, where the largest player can bid the highest, however the auction seems to be more in line with Pinterest’s core function.  The application is a venue to share new thoughts and design ideas, so if one user has a friend who has started a new business, then that user should be able to create boards that include her friend’s product.  Keeping in line with the motto that the users are “just like you”, than the friend’s company should at least have the opportunity to bid on advertising space for people who like the boards created by her user friend without giant companies taking over and dominating that space.  Pinterest will surely be able to capture long-tail advertising dollars with this system, and will likely not have to compete as intensely as its counterparty applications as it will be targeting a different segment of advertisers.

http://adage.com/article/digital/pinterest-launch-a-serve-ad-auction/293551/

http://adage.com/article/digital/pinterest-launches-paid-ads-kraft-gap/293142/