A Deeper Dive Into Pinterest’s Aggressive Ad Strategy

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joybaer“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Joy Baer, president at Strata.

Recent reports that Pinterest is seeking $1 million to $2 million commitments from advertisers mark a bold strategy for the company, especially considering that it hopes to fetch a CPM range of $30 to $40.

I like that Pinterest is aiming high. There are certain moves it can make that will allow the company to command such a high CPM. It will be a challenge to get there, but it’s possible. It already appears on the right track.

Pinterest started testing some advertising late in 2013, and it seems that a big concern for users is being inundated with potentially less relevant pins.

“I am all for you guys monetizing your investment in Pinterest via advertising, but not at the expense of the user experience you have created,” a reader commented on Ben Silbermann’s blog. “You are risking alienating your client base by ruining the experience they have come to love. I know I have already stopped accessing Pinterest via a browser because of the ‘we though’ pins making it cluttered, how many other people will stop using completely if these posts continue to be so prevalent and then migrate to mobile platforms???”

It appears that in reaction to its ad testing in 2013, now Pinterest employs a “high, high, low” approach to advertising: high quality, high engagement, low volume. By ensuring that the ads appearing on the site appeal directly to users, Pinterest will have a strong appeal to advertisers. Most importantly, the company won’t dilute the Pinterest experience.

Pinterest is certainly in the market position to employ a highly engaging strategy.  Considering the type of activities I perform on Pinterest, the company knows exactly what I am highly interested in and could target very specialized ads my way.

I think Twitter’s first approach to advertising last year could have sold its position short. I perform much broader life activities on Facebook, so advertising is potentially less engaging. But on Pinterest, my new bathroom ideas board would be the perfect place for a Kohler ad, while my backyard furniture board would be a great target for Sunbrella. The meaningful, relevant advertising opportunities are endless – and worth the high CPMs.

A high-quality strategy will command those high CPMs, perhaps close to its $30 target. This approach is critical for any social platform to provide meaningful advertising experiences with a focus on engagements. For now, this approach will differentiate Pinterest from other social platforms. It is learning from what did and didn’t work for other social media platforms and evolving on its own.

Pinterest’s approach will also help answer a key question many advertisers have when it comes to advertising on social platforms: What is the ROI for social advertising? This is a question I consistently hear from companies even as they continue advertising on social platforms.

Pinterest may be able to placate the concerns of ad agencies by implementing this “high, high, low” approach. A tailored and focused ad experience for its users will resonate strongly with advertisers that have already been willing to spend the money on social despite questions about ROI. Once advertisers see more direct results from targeted, high quality ad campaigns, the ROI question will dissipate and we may see even more social ad spending.

This approach will also allow for a more meaningful experience for Pinterest’s users. This is good news for Pinterest. Its peers should take note.

Follow Strata (@gotostrata) and AdExchanger (@adexchanger) on Twitter.

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