Pinterest does not communicate much about its expansion or strategic plans but with its $1.5 billion valuation earlier in the year and its recent move to new offices, worth $9 million in San Francisco, California, the social scrap booking website could be preparing itself for a possible IPO in the near future.
Propelled into the social networks scene in 2010, Pinterest has seen an explosion of its audience in recent months. Indeed, between June and November 2011, the site had registered a 2,000% growth, becoming the first to cross the milestone of 10 million visitors faster than any other site.
Today with already more than 20 million users, Pinterest is certainly far from the 900 plus million Facebook or Twitter 500 million users, but is believed to have an enormous potential by analysts and investors. Its strong audience growth has been constantly attracting, despite the fact that the company is still being tested and only accessible by invitation.
Earlier in May, Pinterest managed to raise $100 million, especially with the support of the Japanese e-commerce firm, Rakuten. These new funds increased its initial estimated value of 2011 from $200 million to $1.5 billion, a demonstration of the enthusiasm that it has raised among investors. The latter already seem to jostle for a share of the cake, while the social network generates no substantial income at the moment.
And although it has been only two years since the company was launched, it already presents many advantages for a successful IPO. Unlike Facebook or Twitter, who sought to grow their users’ base before thinking about a business model or sales, Pinterest had already began monetizing while it’s technically still in its beta version.
It actually modifies submitted links from its users when people click directing them to its online selling site partners. And each time a person purchases an item in a given site, Pinterest earns a commission.
And even though its income may still low and the profitability not yet in sight, this business model is ideally suited to e-commerce and online brands communications. As revealed in a social commerce survey by SteelHouse, Pinterest generates higher traffic conversion rate in customer purchases acts than Facebook. In fact, 79% of the social scrap booking website users were more likely to purchase pinned items compared to Facebook users.
By focusing on interests rather than on individuals, the social scrap booking seems to be less intrusive and more respectful in regards to privacy issues, unlike what most people feel about Facebook.
Pinterest users are more receptive to advertising because they mostly post photos of products that are already commercially available, whereas things are much more personal on Facebook. And this partly explains why Facebook users do not always click on sponsored links, simply because they are not there to trade or bargain.
Nevertheless, this economic model is not clearly defined as the firm did not officially comment on the method as being it mean of gaining revenues, but it may prove very profit making in the long run.
Pinterest has also taken some steps towards the mobile devices market particularly application with its iPhone app and it is said to be developing an app for Android phones. This enables the firm to expand its visibility and avoid issues such as the ones faced by Facebook with its users’ migration to mobile devices.
These are just a few tracks many others are certainly available to explore. At the moment Pinterest is working quietly but surely on its expansion, and for what it seems it is already well engaged to make its market debut, but when exactly will this happen? Only time will tell.