How Pinterest Is Conquering the Internet—One Pin at a Time

How Pinterest Is Conquering the Internet—One Pin at a Time

Sparkly, pink, girly ... and a fearsome game changer.

Even if you have no interest in accessories, flowers, crockpot recipes or party planning, you've no doubt heard of Pinterest, a darling of both the startup world and American women looking to kill some time and show off their impeccable taste.

The site lets you organize (or "pin") pictures into "boards," allowing you to build an inspirational world of everything you love and covet. (We've talked about Pinterest several times before—the good and bad—and have our own boards.) It's basic—pictures + links—and at the same time revolutionary.

What sets this very visual social network apart from other hot new startups is not only its outsized growth, but also the conundrum at the heart of its business model: Pinterest is making a lot of people and companies money, but isn't itself earning a dime. Despite this, it's transforming the world of e-commerce—and changing the lives of shoppers, the strategies of retailers and the dreams of copycat startups.

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The Growth Power of 'Pinning'

When it launched in 2010, Pinterest had just 200 users in its first few months—by invitation only. According to the latest official data collected by Nielson's January 2013 Social Media Report, the site had more than 27 million users as of July 2012, and year-over-year PC user growth of 1,047%. Google+, by comparison, had only 80% growth. Yes, Pinterest clobbered Google—and every other social media network.

Pinterest launched new apps this year, as well, so you can pin on your computer, your tablet or even while you wait in line at the coffee shop on your phone—mobile usage grew 4,225%. It's hiring hundreds of new employees, and has swank new headquarters in San Francisco's SoMa district, according to an October profile by Fast Company.

In short, it is the fastest-growing web service in history.

RELATED: Facebook: From Billions of Likes to Billions of Dollars

A Better Way to Browse

Users are so obsessed with Pinterest partly because it represents a giant leap forward in web design. Currently, most websites organize content in a tree (from the homepage to the product) or a timeline or river of content. But Pinterest lets you organize and view by topic. Plus, you can choose to follow only certain boards of friends. So if you like someone's style, but aren't interested in oodles of cupcake recipes, no problem. The result—scroll, scroll, scroll, "oh!," click, pin, scroll, scroll, scroll—is addictive. Users spent a collective 1,255,225,000 minutes on the site in 2012.

Its visual stream of stuff is also tailor-made for shopping. While searching Google for "piggy bank," for example, produces tiny pictures of ugly banks, Pinterest yields a long, visual stream of upscale, kids and DIY piggy banks from every source possible that you can save—or buy—with a few clicks.

For this reason, shopping dominates the site. Pins that feature price tags get more likes, on average (1.5), than those without (1.1). And 80% of Pinterest's top categories are connected to e-commerce.

Wired called Pinterest "grindingly materialistic." Some call it the Best. Thing. Ever.

RELATED: Quiz: How Materialistic Are You?

How Retailers Have Responded

So are retailers annoyed that this site has ursurped their curatorial power? Nope.

Pinterest users are shopping powerhouses, and they happily provide stores with free advertising. Visitors from Pinterest to retail sites spend, on average, $180, while visitors from Facebook spend only $80.

Pinterest shoppers even have the power to launch a small company's fortune. The clothing accessory Camiband was pretty much unknown until a little over a year ago, when pinners picked it up to put on their boards, generating 40,000 hits to Camiband's website in four days--and a huge influx of orders.

Retailers are moving fast to harness the power of pinners. Most online retailers now have a "Pin It" button right on their merchandise. Other retailers are paying influential pinners hundreds and sometimes thousands of dollars to pin their products. And since you can't tell the different between organic pics and paid pins, it's kind of perfect. For retailers, anyway.

There is one caveat to all this: Pinterest users aren't exactly diverse. Between 70% and 84% of Pinterest users are female. And between 74% and 86% of them are white. So if you're trying to target an edgy, urban, minority male, you'd better head elsewhere. But if you want to sell to a crafty stay-at-home mom between the ages of 25 and 54 who loves to bake, you've found your silver bullet.

So Where's the Money?

Naturally, there have been copycats. Some are flagrant, like Manteresting, where pins are nails and likes are fistbumps. Others have taken the board concept and run with it, like Fab, whose shopping boards are curated boutiques and brands. This month, Pinterest actually acquired one of these doppelgangers, the recipe aggregotor Punchfork, whose users it plans to fold into its own.

But while many copycats are making money, Pinterest hasn't announced any sort of money-making strategy--at least not yet. It has raised $138 million from investors, but it only briefly flirted with monetizing content in 2010 through a service called SkimLinks, which paid Pinterest around 6% of the sale price from items sold as the result of a pin. Pinterest stopped the program as quietly, and with as little explanation, as it started.

In 2012, Pinterest hired Tim Kendall, who is credited with creating Facebook's 2006 monetization strategy. But Pinterest founder, Ben Silbermann, has been coy with reporters about how the site plans to eventually earn money.

Some suggestions thrown around include selling products directly through the site, taking a cut of what users buy through an affiliate marketer program or participating in large advertising campaigns with retailers. Pinterest is in a great position to pursue all of these options—the kinds of products pinners tout, like home furnishings and luxury accessories, have very high margins and could be lucrative.

For now, you can pin to your heart's content for free, and remain mercifully guarded from ads—that you know of, anyway.

Image credit: Flickr/ShardsofBlue

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