Pinterest moves into video ads to accelerate revenue growth

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Pinterest Jumps Into Video-Ads Fray


In a move that should surprise exactly no one, social media rising star Pinterest will soon challenge rivals Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) in the booming market for video advertisements.

Pinterest On Ipad
Image source: Pinterest

To make good on its whopping $11 billion valuation, Pinterest has shifted its efforts in recent months to emphasize improved monetization of its over 100 million monthly active users (MAUs). Aside from clearly helping spur new sales growth, let's quickly review this move's implications for Pinterest and its key social media rivals.

Pinterest turns to video ads

According to a host of reports, Pinterest will begin rolling out a beta version of its own video advertising product in coming weeks. These new sponsored videos reportedly last up to five minutes and will remain native to Pinterest's platform.

Unlike video ads on rival Facebook, Pinterest's sponsored videos will automatically play only as users scroll up or down in their feeds and will stop playing once a user stops scrolling. Once clicked upon, Pinterest's sponsored videos will open into a new page where the video will then play with sound in its entirety. Pinterest's marketing partners will also be able to position six so-called "featured pins" beneath the sponsored video, which can highlight additional relevant content relating to sponsored videos.

The moves come alongside Pinterest's broader push into video content. Earlier this month, Pinterest published a corporate blog post detailing its coming plans for video on its platform. As alluded to above, Pinterest plans to unveil its own native video hosting capabilities in the coming weeks, which should help keep users on its platforms for longer amounts of time.

RELATED: 10 things you should never purchase online:

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Items you should never buy online

Flowers

Although it may be more convenient to purchase flowers online, if you have time, it's best to locate a local florist near the person you want to send flowers to. According to a study by Cheapism.com, you're more likely to pay less and receive a better bouquet for your money when you use a local florist. 

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Furniture 

You may not realize it, but when you purchase furniture online, you also have to pay for delivery and surcharge fees. In order to avoid paying these unwanted costs, it's easier to get it in person. For example, when buying furniture in-store, you're able to negotiate a better price and maybe even convince the salesperson to throw in free delivery. 

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Groceries 

Much like shopping for flowers, it is best to purchase your groceries at an actual grocery store. When you purchase them in person, you have the opportunity ensure you are choosing the best meats, produce, etc. -- something you can't do when ordering online.

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Swimwear 

As beach season rapidly approaches, you probably want to invest in a few new swimsuits. However, before you make that online purchase you'll want to heed this warning. Trae Bodge, senior editor at RetailMeNot, says, " Fit can fluctuate even among suits from the same brand...  and many online retailers don’t allow swimsuit returns if the packaging has been opened or there’s evidence the suit has been worn." 

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Social Media Followers 
We get it, social media is addicting.  While it may be cool to have over 10,000 followers, buying them can be risky. Depending on the social media site you are using, the followers you purchase can be deleted if they are considered spam accounts. 

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Prescriptions 
Unless advised by your doctor, you should avoid buying medicine online at all costs. It can be tempting to get off-brand products, but you may be unknowingly purchasing illegal or counterfeit drugs. 

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Cars
The internet has made it possible to cut out the middleman when dealing with major purchases, but sometimes, that salesperson is needed. If you're buying a car for the first time, it may be best to get it at a dealership. When you get a car online, you're taking away the opportunity to test it out first and negotiate a better deal. 

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Knockoff Accessories 
While getting counterfeit bags and jewelry is cheaper than buying the real thing, you should do so with much caution. Oftentimes, these items are sold on unsecured sites which can lead to either your computer getting a virus or your identity being stolen. 

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Pets
While you can find an array of pets being sold online, it is always safest to purchase one in person. Much like furniture, you may have to deal with excessive delivery fees, and what's more, your pet can get sick or even worse. 

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Fragile Items
If you're truly invested in a fragile or irreplaceable item, it's highly recommended to buy and pick it up in the store. This cuts out any chances of a delivery person dropping and breaking your prized possession. 

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In general, Pinterest has seen a sharp increase in the number of video posts on its service. According to the company, pins featuring video content increased some 60% year-over-year, which likely speaks to a consumer preference for the medium. However, in terms of the revenue opportunity video presents the company, Pinterest also disclosed that videos on its service enjoy twice the engagement of videos on other services. Seen this way, it seems quite likely that Pinterest could command above-average rates for its forthcoming video ads. This once again speaks to Pinterest's place as an emerging powerhouse in e-commerce and digital advertising, a movement that Facebook and Alphabet investors would do well to watch closely.

Pinterest: a new challenger to Alphabet and Facebook

At present, Facebook and Alphabet utterly dominate the digital advertising space, collecting the bulk of digital advertising spending between the two of them. As just one example, Alphabet collected roughly 50% of all U.S. digital ad dollars in 2015 according to the Interactive Advertising Bureau. Though significantly behind Alphabet, Facebook garnered a still-impressive 13% of this same category. These figures suggest little can be done to challenge such powerful incumbents. However, in reality, upstarts like Pinterest and Snapchat figure to do exactly that.

Like Alphabet in search, Pinterest users demonstrate outsized intent-marketing jargon for browsing with the desire to try or buy a good or service. In fact, nearly 60% of Pinterest users leverage the service to find and buy products according to Mary Meeker's always-useful 2016 Internet Trends report. For context, the platform with the second highest purchase intent -- Facebook -- saw only 12% of its users access the service to find and buy items. That massive disparity bodes extremely well for Pinterest developing a highly profitable business in the years to come, and its move into video advertisements only furthers this narrative. So while Pinterest remains far smaller than larger rivals like Facebook and Alphabet, tech investors everywhere would do well to closely watch the company's quiet, but impressive new growth efforts.

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