Pinterest Revenue Streams, Pt 1
Pinterest revenue primarily arises from selling digital advertising — performance and brand ads, to marketers and companies. The company also earns interest income from its cash, cash equivalents, and marketable securities.
PINTEREST REVENUE STREAMS
- Pinterest targets two key players: Pinners and advertisers. However, Pinners, also known as users, get the service for free.
- Advertisers are at the core of Pinterest's monetization strategy.
- The firm's primary revenue stream is selling digital advertising to marketers and companies. These are the performance and brand ads.
- The social network also generates revenue from non-operating activities such as interest income.
- Geographically, Pinterest's revenue stream is segmented into the US and International sources (Brazil, India, Turkey, and Poland).
- Performance ads make up around 2/3 of Pinterest's revenue. They are also known as "Promoted Pins."
- Promoted Pins are (sponsored posts) bought by advertisers that show up in a user's home feed and search results when they visit an advertiser's page on Pinterest.
- An advertiser will need a business account to create Promoted Pins. Then, they'll visit the Ads Manager page on the platform where they can activate their pins after making the necessary payment as established by Pinterest for a set of campaigns.
- The rest of Pinterest's revenue generally comes from click-to-buy shopping ads on the platform, which uses a "buy it" button to integrate Pinterest with major e-commerce brands like BigCommerce, Shopify, IBM Commerce, and Salesforce Commerce Cloud so that users can buy directly, rather than visit a merchant's separate site.
- The first time a user attempts to purchase a product via the "buy it" button, they will be directed to a page where they will enter their payment information and shipping address, "which will be saved and usable henceforth. After that, the user has only to confirm that information, and click "buy it" to take action on what passion inspires them at that moment."
- All ads on Pinterest are bought via an auction system.
- Interest income is revenue that arises from Pinterest's non-operating activities.
- The social network earns interest on its cash, cash equivalents, and marketable securities.
- Pinterest estimates revenue based on the "geography in which ad impressions are delivered."
- Currently, it only monetizes certain countries, with the United States revenue primarily higher due to the maturity of the country's digital advertising market.
- The revenue is disaggregated into the US and International sources (Brazil, India, Turkey, and Poland).
The research team leveraged Pinterest's S-1 form available at the US Securities and Exchange Commission, trusted media sites referencing the company's financials, and the official website, especially the "investors relation" page, to identify each of the firm's revenue streams. In the run-up to its IPO, the company released its S-1 document, which gives significant insight into its earnings and different revenue channels. The report reveals that the company's revenue is primarily from advertiser relationships separated into performance ads and brand ads. This message is similar across other databases; for example, CNBC, a credible media site, also lists performance ads (promoted pins), and brand ads (click-to-buy shopping ads) as the primary sources of Pinterest's revenue. In addition to these, there is the interest income that comes from the company's non-operating activities, and revenue breakdown by geography, as shown in the S-1 form, the Four Week News, and more.