Pinterest’s S1: Looking for ‘Visual Discovery’ Dollars

Pinterest’s S1 filing highlights its pioneering role in visual discovery. Now, however, it finds itself forced to compete with other visual discovery players, including search and social giants like Google, Amazon, Facebook, Instagram and Snap; and vertical players like Houzz and Allrecipes.

As the S1 reveals, Pinterest has an international base of 265 million dedicated “pinners,” who have produced 175 billion special interest boards (i.e. “Recipes” “Travel” “Technology”.) Two-thirds of its users are women, with mothers an especially important subset. ComScore estimates that Pinterest attracts visits from 80 percent of U.S. mothers, which feels high.

That usage has been parlayed into a “buyable pins” insertion program, which was introduced in 2014. Buyable pins, renamed “product pins” last October, are now responsible for the bulk of Pinterest’s 2018 revenue of $755.9 Million, a figure that is up 60 percent from 2017.

From the beginning, the point of Pinterest’s product pins has been to engage and capture new customers for retailers, brands, CPGs and other advertisers. Pinterest’s real strength here is its ability to get consumers — not yet committed to any brand — when they are ready to buy. The S1 notes that 97 percent of the 1,000 most popular searches on Pinterest are unbranded.

While retail and CPG companies provide the lion’s share of advertising, Pinterest vaguely notes that its sales forces work with an increasing number of “mid-market” brands, and that SMBs are increasingly coming on board as inexpensive, self-service tools become more widely available.

Going forward, however, the question for Pinterest is whether it can continue to grow and monetize its user base, while staving off competition. To do this, it will clearly need to add more international users, and more men. The latter is a real challenge for the site, which has strived to add men via such pinner boards as “Man Cave” and “Home Brewing,” but is largely perceived as a women’s site.

The monetization efforts loom even larger. Since 2014, Pinterest has relied almost entirely on advertising. Indeed, it sought to play a reassuring role to advertisers by consciously steering clear of e-commerce. When a user wants to buy something, they are automatically sent to advertiser sites.

Many of Pinterest’s competitors, however, are opening direct- to-commerce stores and positioning themselves for e-commerce, which would bring larger profits than advertising. Amazon, Google, Instagram and Snap, for instance, each provide shopping features.