Can Pinterest Monetize With A Recommendation Engine?

Pinterest just revealed an advertising methodology that they are testing, have you seen it?

This week Pinterest confirmed the look & feel of their new advertising method. Lots of bloggers reported on it, but I haven’t seen any thoughtful commentary yet.

So, here is mine…

And before we jump in, to be clear, they are just starting to test this stuff – so it’s really just their first “at-bat”. They are going to modify their monetization strategy a thousand times before it works well, (I’m sure). With that said, here is their screenshot of what it looks like, (from their blog post).

Julies Outdoor Supply Not Real?

(Okay, wait, total side note – I cannot find any company named “Julie’s Outdoor Supply” on Pinterest, or online. Am I missing something in my search method? I hope it wasn’t fabricated. This isn’t that big a deal, but I thought I’d mention it.)

 

A Recommendation Engine? No Thanks, I already Built Mine

Based on what I’ve read/seen – the Pinterest team is operating on the idea that their algorithm can determine what you “might like” based on what you’ve previously pinned (or maybe who you follow and/or the boards you follow)…then promote those types of pins in your feed.

In other words, a recommendation engine, or a “recommender system”, as it’s called in Wikipedia. This is similar to how Netflix serves me recommendations, or Pandora, Amazon, etc. There is no doubt it works on those sites. But there is a huge different between Pinterest and those sites, (I’ll explain that in further detail below)…

The Big Problem Is…

I already built my recommendation engine on Pinterest. Every user has. How did we do it? The recommendation engine that is already baked into Pinterest is called “following” people. I’m following people I want to get ideas from – those ideas show up in my feed.

My feed is the way I like it (thank you) and it is constantly serving me up “recommended items” that I gladly accept because I’ve fine-tuned the algorithm myself by following and unfollowing people and boards. In fact, I took the last two years to customize my recommendation engine. I’m following people, and boards because I want to discover things based on what they do, who they are, where they live, and tons of other subtle and complex reasons.

If they are a brand, then I’ve opted in to follow them and see their pins at my choosing. Psychologically, that “opt-in” element makes it okay for them to market to me. I accept it gladly.

This is my social recommendation engine algorithm. It rocks. It’s customized for me. It’s perfect. It’s part of the Pinterest magic – the power of the site.

CRE Versus SRE

It seems the plan is that Pinterest’s commercial recommendation engine (and the promoted pins it offers up) will replace (or partially replace) my social recommendation engine and the pins it offers up. So a substantial portion of what I see in Pinterest will be tied to the Pinterest monetization strategy and revenue goals, not my social connections. I guess we could call it CRE versus SRE, (for those who like acronyms)…

The Commercial Recommendation Engine versus the Social Recommendation Engine.

I don’t think a CRE is a winning monetization strategy on Pinterest…Here is my anecdotal proof, from the Pinterest blog comments, (you can see all of them here):

pinterest advertising feedback

The Big Difference Between Netflix & Pinterest:

So why won’t a commercial recommendation engine work on Pinterest, (as the basis of an advertising method), if it works so well on Amazon, Pandora, and Netflix?  There are two reason:

  1. Those sites aren’t social networks.
  2. Those sites don’t already have any other recommendation engine installed and running.

Let me explain…

I don’t follow people on Netflix and watch what they watch. That wouldn’t be something I’d enjoy. I don’t follow people on Amazon and buy what they buy. Again, that wouldn’t be something I’d find helpful. Those aren’t social networks.

So, the recommendation engine on those sites perform a function that is not already available.

Here’s the big aha… On Amazon, (and Netflix), in exchange for the recommendation engine function being provided to me, I’m willing to accept the fact that it has some commercial intent. So I want a recommendation engine on those sites, (for sure), and the only one available is provided by the company for commercial reasons. And I say, that’s cool. I know Amazon wants me to buy another book, which is why they are recommending it, and I’m okay with that. The tool is valuable enough to accept this commercial aspect.

Alternatively, Pinterest and Facebook are both trying to do this same thing right now…

They are trying to supplant social recommendations, (already organically delivered through the social connections on the site), and replace them with commercial recommendations, in order to make money. But I already have a perfect recommendation engine. I have my social recommendation engine.

Their commercial (unwanted) service (which is not perfect) is being forced into the user experience to replace the (socially delivered / trusted) and wanted service.

That is not a winning idea.

Most people won’t accept this type of win/lose proposition for very long before getting very annoyed and beginning the search for alternatives. And just because TV stations got away with it for forty years, doesn’t mean that it will work on a social network. And just because it works on Amazon doesn’t mean it will work on a social network for revenue stream purposes.

In any industry, if you build a (three-party) monetization model by forcing consumers to be subjected to advertising content they don’t like – eventually – those participants will find a purer alternative. An alternative that doesn’t annoy them.

The Missing Objective:

I realize Ben & the Pinterest Team are working hard to get this right based on their stated objectives for the advertising program. I truly trust their intentions, and I think they will get it right. Their goals include being Tasteful, Transparent, Relevant, and having ads Improve Based On Feedback. Those are all good goals. However, I believe they need to add one additional goal to their list of objectives to really get it right:

Helpful … their ads need to be helpful.

A Costco membership is helpful, I gladly pay. Priceline is helpful, I gladly use it. Amazon’s recommendation engine is helpful, I gladly buy an extra book. Google search results are helpful, I gladly glance to the right to see if a paid ad is a better option than an organic search result.

Filling my Pinterest feed with commercial content is not helpful.

Helpful businesses build long-term competitive advantage and brand loyalty. Facebook, (according to my teenagers), is already over. We all know it’s in decline, but we’re too afraid to say it.

I truly hope Pinterest doesn’t take a (very bad) play from Facebook’s playbook. Stop and reboot with a new concept.

I know, I’ve already blogged about an alternative concept, here and here, so I apologize for repeating it again, but there are better options than an Adwords styled system. I’m sure they’re harder to figure out, but it could be done.

Whatever happens, it will be fun to watch!

Jason Miles is the CEO of Liberty Jane Clothing, a Seattle based ecommerce company, and the author of the Bestselling Pinterest Power book - the definitive book on Pinterest marketing. He regularly partners with leading online groups and sites including, the American Marketing Association, IBM's Connectchat, Social Media Examiner, Profnet, Marketingprofs, and similar groups.

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