A recent Ad Age article announces a huge shift in focus of the Pinterest platform towards online video rolling out full auto-play video for its users and, of course, Promoted Video ads for advertisers wherein brands can purchase Buyable Pins below videos. It is no surprise that Pinterest is going in this direction; online video ad spending will reach $7.46 billion in the U.S. this year and $14.77 billion by 2019 according to eMarketer. However, social media platforms have attempted to monetize through ads before with variable success. Twitter, for example, continues to struggle (see chart below). So, will making online video “core” to the platform launch Pinterest to the pinnacle of success or kill it altogether? It depends on the execution.
First, let’s talk about why the move could absolutely work. Pinterest is successful popular because it offers users a simple, less crowded visual content curation space. It is less involved than Facebook or Twitter, and users can easily interact with friends, brands , and celebrities with as little or as much investment as the user wants. Pinterest is uniquely positioned to become the social video curation platform that YouTube was never able to really be because it built the social network first and is now adding the video aspect next. Further, Pinterest is set up to share across platforms to take advantage of the reach available on platforms like Twitter. These two things together allow Pinterest to become the perfect channel for driving viral advertising reach as user contacts help curate ads ensuring relevance, maximum effectiveness, and more sharing. It could be the best combination of user- and advertisers- friendliness we have seen thus far.
So…here is where Pinterest could doom it to fail. Initially, Pinterest is only rolling ad availability out to major players (minimum $500,000). This is a mistake! While the major brands may be needed for revenue in the present, part of the draw of the platform for users is to find inspiration through seeing unique products; for brands, it is to be able to promote unique products. Many of the commercial users are small businesses. The beauty of the site for users and brands is that non-mainstream products and ideas can be explored and shared. Further, being able to advertise in the space would be much more useful to SMBs with lesser budgets than for major brands. Pinterest risks alienation of its users via over-commercialization and killing its long-term ability to extract value of SMB advertising with its current roll out plan.
So, to sum up, Pinterest’s move toward could represent a powerful new channel for advertisers that could be a tremendous viral advertising seeding opportunity, or it could kill the platform altogether. Proceed with caution Pinterest.