Why Pinterest Ads Are Going to Be Great

Pinterest has already proven successful in driving sales for online retailers, particularly for women. The mostly (80%) female social network has a really smooth flow to a point of sale, which makes it uniquely valuable to marketers. In the new year, Pinterest announced its intention to roll out their advertising platform to the public, and all indications would suggest it will be a great success.

Firstly, as I said, Pinterest boards already convert well to sales. Ads will therefore feel very similar to users. Although there will likely be a design element identifying promoted pins, the interaction with images linked to sites will be very similar. If you think about how starkly ads and posts on Facebook differ, this is a non-trivial difference.

Secondly, Pinterest is a platform where people post about their aspirations, including things they would like to buy. A comparison that I think is on point is: if you’ve bought a new piece of clothing, you Instagram it; if you see something online that you love, you Pin it. This information is incredibly valuable to marketers, making it possible to target an audience that has actively expressed an interest in purchasing their product. No other platform is this powerful: Facebook, for example, can at best offer an audience of people interested in your product, which does not necessarily mean they want to buy it.

Finally, among women Pinterest has reached a percentage of the US market that outshines all but Facebook, with 42% of online adult women using the platform. That is more than Twitter, Linkedin, or Instagram. The platform is growing faster than most, too, with an increase from 21% to 28% of online adults on it from 2013 to 2014 (only Instagram did slightly better).

Pinterest is a large and growing platform with exciting prospects for marketers. However, the high ROI of their ads is doomed to decay. To steal a piece of wisdom from Andrew Chen, “over time, all marketing strategies result in shitty clickthrough rates”, meaning that as a certain marketing channel is used more and more, its effectiveness decreases. Email marketing open rates, for example, decreased from 14% to 11.3% between 2007 and 2009.

Fortunately, there are ways to fight this law, and one such solution suggested by Andrew is to “discover the next untapped marketing channel”. That is where Pinterest comes in. Given all I have said above I believe Pinterest ads will consistently be more valuable than other social ads, but the best results will come to those first out of the gate.

Why Pinterest Ads Are Going to Be Great

Where Are the Marketing Dollars Going?

Signs point to marketers opening up their wallets for emerging digital technologies, placing bets on measurable channels such as email, search and social media, shifting resources toward consumer-facing technology, and spending wads of cash on content creation and aggregation.

But success is far from certain.

There’s no question marketing budgets are on the rise. More than half of business-to-business marketers expect their budgets to increase this year, compared to 31 percent of respondents who expected budgets to increase last year, according to a Forrester survey.

What’s Driving the Budget Increase?

What’s behind the increase in spending? Nine out of 10 marketers say digital marketing technologies, which make up a chunk of business technology (BT), are critical to success.

[ Related: Why Marketers Don’t Understand Marketing Automation ]

“The CIO of one of the largest banks told me, ‘I have unlimited budget for the BT agenda,” Forrester CEO George Colony told attendees at Dreamforce last year.

Of course, the spike in marketing tech spending has attracted tech giants such as Oracle, which has been on a $3 billion marketing-tech acquisition spree, as well as a plethora of startups. Venture capitalists, too, are rushing to this feeding frenzy.

“In most companies, a CMO can write a million-dollar [operating expense] commitment in a heartbeat,” Ashu Garg, general partner at Foundation Capital, a Silicon Valley venture capital firm boasting big wins with marketing tech investments, told CIO.com last fall.

Follow the Money (or Try to)

Exactly where marketers are putting their dollars, though, isn’t clear.

For instance, a survey from Autopilot found that website, search engine optimization, branding and social media technologies are priority areas, not so much marketing automation. In contrast, a Forrester survey found that marketers’ top focus in terms of their budget is email marketing, followed by search marketing and display advertising.

[Related:  10 Cool Marketing Automation Startups to Watch ]

The Forrester survey shows marketers directing their budgets on “measurable efficiency channels.” However, a survey commissioned by Leapfrog Marketing Institute found that marketers plan to shift their budgets from channel and product-focused initiatives to consumer-focused ones, such as customer acquisition, retention, loyalty and CRM.

Another murky area is a marketer’s return on investment.

Many loaded guns are leveled at a marketer’s chances of success, according to Forrester. As with any emerging technology, the right skills are hard to find. Only 43 percent of marketers say they are able to find and hire people with the digital marketing skills they need.

The Realities of Digital Disruption

Marketers have also waded into unfamiliar technical waters. In other words, marketing technology and data analysis have upended their profession. Most marketers are still trying to wrap their heads around the complexities of technology and trying to separate hype from reality. Hence, there’s a real fear of failure.

Perhaps most frightening of all, the majority of marketers don’t really have a plan. They’re making reactive marketing tech decisions rather than strategic ones. In fact, Forrester says only 44 percent have a clearly defined and deployed digital strategy.

The bottom line: Lots of scatter-shot marketing dollars hang in the balance, while returns may prove to be elusive.

Where Are the Marketing Dollars Going?

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