Social media site Pinterest secures extra investment worth $225 million
It plans to expand on mobile and to new audiences outside the U.S.
Investors believe Pinterest users often buy products they see on the site
Social media site Pinterest just received another $225 million in funding. The offering, led by Fidelity Investments, puts the company’s valuation at a staggering $3.8 billion.
Not bad for a three-year-old social network that has no revenue and is laying the foundations for a business model.
Pinterest is the digital equivalent of a scrapbook. Its virtual pin-boards have become a popular place to share pictures and reviews of a wide variety of products – everything from weddings to home remodels.
Bottom line: People come to Pinterest with more of an intenticon to buy than when visiting other networks like Facebook and Twitter.
A visit to the makeup room at CNN’s New York studios explains it. When the hair and makeup artists aren’t freshening up our anchors’ faces, you can find the women (and a couple of guys) cruising Pinterest for the latest and greatest in makeup supplies.
When one of them finds a great review, you hear her yell: “Check this mascara out!” and then the other makeup artists crowd around the computer screen to see. Beneath the photo of the mascara, the user posts details about the product and tips for using it.
This makes the California-based site attractive for major companies to create their own pin-boards to promote their products.
Rick Heitzman is the Managing Director at FirstMark Capital – a venture capital firm that has invested in Pinterest – and he says the strengths are the visual nature of the platform, as well as the size and growth of the social network’s user base.
Pinterest had nearly 25 million unique monthly users in the U.S. last month, according to comScore.
“People spend a large amount of time on the site,” Heitzman said. “That intent is often tied to some commercial experience. Whether it’s looking for a place to go on vacation or a wedding, that leads to commercial aspects and that’s different from other social networks.”
He is also encouraged by how Pinterest is starting to attract revenue. The company is testing out sponsored pins, which will be their way of advertising. But instead of “flashy banners” or pop-up advertisements, Pinterest is weaving ads right into the digital pin boards their users see.
“They work just like regular pins, only they have a special ‘promoted’ label, along with a link to learn more about what that means,” Ben Silbermann, CEO and Co-Founder of Pinterest, wrote in a blog post in September.
Web analytics might also be a revenue stream for Pinterest. Earlier this year it rolled out tools that give the managers of Pinterest pages insights into how people are interacting with pins that link to their websites. Retailers might be willing to pay money to learn how to better curate the experience for the customers using Pinterest to get to their websites.
Pinterest says it will use its $225 million, which was first reported by AllThingsD, to continue to expand on mobile and international growth.
Meantime, the CNN makeup artists continue to cruise the pin boards for the newest and best concealers.