How Pinterest Could Stamp on Google’s Feet

By Rob McNair

Those who know me will know that Google’s plethora of advertising platforms aren’t something I advocate. However, one thing no one can argue about is their ability to deliver advertisements that provide such a clear path to purchase that other forms of advertising are struggling to achieve. Around 20% of all searches on Google are performed with intent to buy. This is why Facebook cannot compete with Google, who, despite having similar levels of traffic, posted revenues almost 7x that of Facebook’s last quarter.

Facebook’s dilemma is that people just aren’t looking to buy when they’re using their platform; they want to connect with friends and brands, but not necessarily buy immediately. Whilst Facebook are making the right moves to help businesses amplify and capitalise any word of mouth regarding their brand, brands have become so accustomed to being able to track from exposure to purchase online that diverting ad spend to Facebook’s native display formats is difficult to justify when simply consulting a spreadsheet.

However, where Facebook does trump Google is that it’s advertising is powered by social data. As Google are well aware, their machine-powered algorithms are vulnerable to “black hat” SEOs who are prepared to violate their Webmaster Guidelines to improve the short-term rankings of the sites they are optimising. Conversely, social ads are controlled and served based on your interactions with other people and brands within your social network. The question is, how does one maintain this rich, social experience and still make sales?

Enter Pinterest, the unassuming photo sharing social network that took the world by storm, claiming a valuation of $1.5 billion as of March 2012 and outperforming both Facebook and Twitter on first-touch and multi-touch click revenues. The reason the platform shines for brands is that when users are on Pinterest, they’re in the mood to buy.

Google puts the things in front of you that you already know you want and gives you a selection of places to buy them from, and more often than not you’ll just choose the place with the lowest cost. Pinterest looks and feels like the online equivalent of a shopping mall, curated by people you know, want to know or aspire to.

Google offers little value if you aren’t sure what you want to buy, whilst Pinterest says “Here’s a bunch of products people think are cool, here’s how much they cost and here’s a link to the website”. Early reports are showing that Pinterest is already driving revenues for online retailers; naturally they’ll be looking on how to capitalise on this some time soon.

Consider the impact window-shopping has on offline sales. It’s no surprise that women, whom influence 80% of all New York retail sales, make up a staggering 72% of Pinterest users. Women, it seems, love to shop.

Despite their disputes, could it turn out that Facebook may not be Google’s biggest adversary? Whilst they can provide the social experience that Google so much crave, they’re struggling to match up to Google’s ability to provide such a clear and demonstrable return on investment.

Google may need to start flexing their financial muscle if Pinterest can successfully provide an advertisement solution with an elegant interface that’s sensitive towards the social experience. Could it be that Pinterest is the perfect way down the decision making process to combine the rich experience of a social network with the revenue tracking abilities of search engine? With the likes of The Fancy hot on their heels, along with similar social networks that takes the social cataloguing concept even further, Pinterest will need to move pretty quick. We’ve taken a closer look at just how they might do that in an earlier post.

This post was written by Rob McNair

Rob has experience advising some of the worlds most iconic brands. He thrives on helping improving social media knowledge within organisations with the ultimate goal of making theirs brands more social, transparent and accountable.