Chapter 1. Case study 1.9 Pinterest: A picture is worth a thousand words. Pages 46 49. Answer questions 1, 2, and 3 on page 49. Clearly cite all the sources.
Case Study below
Like all successful e-commerce companies, Pinterest taps into a simple truth. In Pinterests 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 Dcor, and Womens Fashion among the most popular. Find something that you particularly like? In addition to saving 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 pinners boards to keep track of everything she or he pins. As of February 2017, there were over 75 billion pins on Pinterest on more than 1.5 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 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.
As of June 2017, Pinterest has over 175 million monthly active members worldwide.About 70% of those members are women, but men are its fastest growing demographic: according to Pinterest, 40% of new signups are men. 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, increasing to about 70 million in 2017. Thus far, 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. 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 generating revenue. Pinterests 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 gender, board titles, captions, and comments related to pins, to create different categories and subcategories. In the last several years, Pinterest has gotten serious about monetization. In January 2015, it rolled out Promoted Pins to all its U.S.-based partners and they are now also available to advertisers in the United Kingdom, Canada, Ireland, New Zealand, and Australia. In May 2015, it added Cinematic Pins, a made-for-mobile format. Cinematic Pins display a short animation when the user scrolls down through the ad, and only play a full-length version when the user clicks on the ad, providing more user control over the experience. Pinterest also introduced new ad-targeting and pricing options. Advertisers can target users by interests, life stage, or persona such as Millennial, prospective parent, or foodie. In 2016, it added three additional ad-targeting options: custom list targeting (similar to Facebooks Custom Audiences); visitor targeting, which allows advertisers to retarget a customer who has visited the advertisers website; and lookalike targeting, which enables advertisers to target consumers who share traits or behaviors with the advertisers existing customers. Ads can be purchased on a pay-per-view, pay-per-click, cost-per-engagement (CPE), or cost-per-action (CPA) model. Using the CPE model, advertisers only pay when a user engages with a pin, such as through re-pinning, and with the CPA model, only when the user clicks through to a website and makes a purchase or downloads an app.
Search advertising is the next frontier for Pinterest. Pinterest search differs from other types of search because it is visual and typically happens at the early stages of a persons decision process. Users currently conduct over 2 billion keyword and 250 million visual searches per month on Pinterest. In July 2016, Pinterest began offering its search inventory to advertisers for the first time and in February 2017 expanded its paid search platform functionality to include keyword ad campaigns, shopping campaigns, targeting, and reporting. Pinterest believes search advertising revenue can become a significant part of its business, and that it can challenge Google in the mobile search arena. It is making significant investments in search technology, such as deep-learning assisted visual search, which will build on its existing visual search tool that allows users to search within images on Pinterest. In August 2016, it began updating its visual search tools to work on videos and also began rolling out a fully integrated native video player similar to that offered by Facebook, along with video ads. In February 2017, Pinterest introduced several updates to its visual search tools, all focused on the ability to pinpoint specific elements within an image. One feature, called Lens, can automatically isolate the different objects in an image stored on a users camera, and gives the user the ability to start searching for similar elements. Another tool enables users to jump from element to element, such as from a shirt to pants, within a pinned image. Many analysts also believe that Pinterest will become a significant factor in the social e-commerce arena. In 2015, Pinterest launched Buyable Pins, which allow users to directly purchase products by clicking a blue Buy It button within the pin, for its iPhone, iPad, and Android apps, and in June 2016 also made them available on the desktop. According to Pinterest, more than 10 million unique items are available for sale, from over 25,000 different merchants both large (such as Macys, Nordstrom, Neiman Marcus, Bloomingdales, and Wayfair) and small. Pinterest says its data shows that Buyable Pins are generating a significant percentage of brand-new customers for merchants. Pinterest is significantly ahead of other social networks such as Facebook, Instagram, and Twitter in terms of the percentage of users who use it to find or shop for products: 55% for Pinterest versus just 12% for Facebook and Instagram and 9% for Twitter. And almost 90% of users have purchased a product they have seen on the platform. To further enhance its lead, in 2016, it announced a number of other e-commerce-related initiatives, including Shopping with Pinterest, a shopping cart that links to a users account, is visible on all devices, can hold multiple items, and allows for checkout on any device. The fact that Pinterest launched Buyable Pins on its iOS mobile platform rather than the desktop is just one indication of how important the mobile platform is to Pinterest. Pinterest provides apps for iPhone, iPad, Android, and Windows Phone, as well as a mobile version of its website using HTML5. Pinterest Mobile runs inside the smartphones browser rather than as a stand-alone program. Mobile has been a huge success for Pinterest, with 80% of its traffic coming from mobile devices in 2017. Pinterest releases new versions of its mobile apps on a regular basis, and in April 2016 launched a nearly completely written iOS app that allows the home page to load much more quickly, scales to the different number of iOS screens more efficiently, and is readable in all 31 languages in which Pinterest is available. According to Pinterest co-founder Evan Sharp, the smart-phone is the platform Pinterest focuses on when it develops new features and products. International expansion continues to be a major area of focus. Pinterest introduced its first localized site, for the United Kingdom, in 2013, and it is now available in 31 different languages. Pinterest is aiming to make its platform feel more regional, focusing specifically on the United Kingdom, France, Germany, Japan, and Brazil. In 2017, about 60% of its monthly active users are located outside the United States. Looking to thefuture, Pinterest believes that international expansion will provide it with the greatest growth opportunities.Despite all the good news for Pinterest, there are some issues lurking just behind the scenes that may cloud its future, such as the issue of copyright infringement. The basis of Pinterests business model involves users potentially violating others copyrights by posting images without permission and/or attribution. Although Pinterests Terms of Service puts the onus on its users to avoid doing so, the site knowingly facilitates such actions by, for example, providing a Pin It tool embedded in the users browser toolbar. Much content on the site reportedly violates its Terms of Service. Pinterest has provided an opt-out code to enable other sites to bar its content from being shared on Pinterest, but some question why they should have to take action when Pinterest is creating the problem. Another thing Pinterest has done to try to ameliorate the problem is to automatically add citations (at-tribution) to content coming from certain specified sources, such as Flickr, YouTube, Vimeo, Etsy, Kickstarter, and SlideShare, among others. In 2013, it entered into an agreement with Getty Images in which it agreed to provide attribution for Getty content and pay Getty a fee. Pinterest says it complies with the Digital Millennium Copyright Act, which requires sites to remove images that violate copyright, but this too requires the copyright holder to be proactive and take action to demand the images be removed. Christopher Boffoli, a well-known photographer, filed a federal lawsuit against Pinterest in late 2014 alleging that Pinterest users used his photographs without his permission and that Pinterest failed to take adequate measures to remove them. In 2015, Boffoli agreed to dismiss the case, presumably as part of a confidential settlement with Pinterest, leaving the legal issues raised unresolved. Pinterest is also not immune to the spam and scams that plague many e-commerce initiatives. Security analysts believe Pinterest will have to adapt its systems to deal with scammers and warn users to be wary of requests to pin content before viewing it and to be suspicious of free offers, surveys, and links with questionable titles. Pinterest has acknowledged the problem and has promised to improve its technology. In 2015, for instance, Pinterest migrated its website to the HTTPS protocol, which provides more security than the more common HTTP protocol typically used to access web pages. Pinterest also employs a system known as Stingray that enables it to quickly react to spam and other types of malicious behavior, and has created a program that pays a bounty to white hat hackers who discover security issues. At the moment, however, the future looks very bright for Pinterest. Although it may encounter some future obstacles along the way, it has begun to generate significant revenue (estimated at over $500 million in 2017), and is reportedly gearing up for an initial public offering in the new future.
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?
