Businessmodel of Pinterest

Customer Segments

Pinterest has a segmented market business model, with customer groups that have slightly different needs. It is used by consumers who want to collect and share photos, as well as by businesses to share photos in order to promote their offerings. The majority of its consumer base is female.

Value Proposition

Pinterest offers four primary value propositions: accessibility, customization, performance, and brand/status.

The company creates accessibility by enabling businesses to identify consumers who have interests in subject matter related to their offerings. The brands do so not only by seeing consumers’ collections, but also by obtaining marketing data on users from Pinterest itself. This makes it easier for companies to recruit new customers. Pinterest also increases access by offering a wide variety of options. Its website is available in 30 different languages, allowing people all over the world to use it.

The company enables customization by allowing users to personalize their pages. It allows them to create a virtual pinboard where they can organize their images, videos, and text into theme-based categories – e.g., events such as fashion shows, interests such as food, and hobbies such as arts and crafts. They can also re-pin images from other users’ pinboards to their own collections.

The company has demonstrated strong performance through tangible results. It indicates that:

• Businesses advertising on the site usually see a 100% increase in web traffic within a week of introducing their first campaign
• Consumers spend more money when visiting retail websites directly from Pinterest than when they visit from other social sites such as Facebook

• Consumers who have seen a Promoted Pin (a product or service that is given prominent placement) have a 40% higher awareness of new products and 50% higher purchase intent than those who do not; they also have engagement rates 2-5% higher than the industry average High-profile examples of specific positive outcomes include the following:

• Spot Color Art, a business that markets authentic handcrafted art, used Pinterest’s Promoted Pins solution to reach more qualified customers, increasing its sales by 200%
• BabyList, a service that helps parents pick their ideal baby registry, used Promoted Pins, resulting in a 70% growth in account signups and a 40% rise in revenue within five months
• Scoutmob, a lifestyle marketplace for independent makers, used Pinterest’s services to promote its offering, resulting in returns 2x higher than on any other social platform
• Ali Edwards, a provider of memory-keeping kits, used Promoted Pins to showcase its new products and designs, resulting in an 80% increase in transactions The company has established a powerful brand due to its success. It is one of the largest social networks in the world, with over 100 million monthly active users, called “Pinners”. It has a number of prominent Pinners, including First Lady Michelle Obama and Ann Romney, wife of former Governor Mitt Romney. As of 2015, it had an $11 billion valuation. Lastly, it has won many honors, including “Best Social Media App” and the “People’s Voice Award for Best Functioning Visual Design” at the Webby Awards (2012) and “Best New Startup” at the TechCrunch Crunchies Awards (2011).

Channels

Pinterest’s main channel for consumers is its website, through which it acquires most customers. It reaches out to companies through its business development team. The company promotes its offering through its social media pages and participation in events such as conferences.

Customer Relationships

Pinterest’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of e-mail support.

Key Activities

Pinterest’s business model entails maintaining a common platform between two parties:  businesses that want to promote their offerings and consumers interested in purchasing them. The platform includes its website and mobile app.

Key Partners

Pinterest maintains the Marketing Developer Partners (MDP) program, which consists of firms that provide services and tools to help brands on the site grow and optimize their earned, paid and owned content. The partners are carefully selected and fall into the following categories:

• Marketing Developer Partners for Ads – Providers that use their ad platforms and Pinterest’s Ads API to help brands manage and optimize their Promoted Pins. Specific partners include 4C, Adaptly, adMixt, Adparlor, Amobee, Ampush, Brand Networks, Hyfn, Kinetic, Social Code, and Unified.
• Marketing Developer Partners for Content Publishing – Providers that use Pinterest’s Content Publishing API to help brands identify, schedule, publish, and measure content on the site and optimize the experience for Pinners. Specific partners include Ahalogy, Buffer, Curalate, Expion, NewsCred, Olapic, Percolate, Salesforce, Spredfast, SocialFlow, Sprinklr, and Tailwind. ### Key Resources

Pinterest’s main resource is its proprietary software platform, which serves more than 100 million monthly active users.

It depends on its technology employees to maintain and update the platform, its business development staff to promote it, and its customer service staff to provide support.

As a relatively new startup it has relied heavily on funding from outside parties, raising $1.32 billion from 31 investors as of June 2015.

Cost Structure

Pinterest has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions.

Its biggest cost driver is sales/marketing, a fixed cost. Other major drivers are in the areas of customer support/operations and administration, both fixed costs.

Revenue Streams

Pinterest has one revenue stream: revenues it generates from charging fees to brands to obtain Promoted Pins. Promoted Pins are products and services that receive prominent placement on the site. They are native ad units and are designed to increase awareness, engagement, and traffic.