Pinterest, Phenomenon or FAD?

Most people that use social media frequently have heard about Pinterest.com, a new social media site that allows users to pin, board images and themes such as hobbies, electronics, beauty and more. However, in being a young website at barely older than 2 years, the majority of the world is not yet aware of the new social media site that is exploding up the United States traffic rankings. It is currently ranked 16 in the US for website traffic. Most up to date websites have a Facebook and Twitter button, with the occasional LinkedIn or Google Plus button. It may not be long before Pinterest is the new social media site that every business creates a button for so that others can pin and reach out to that businesses board.

It is not a question of whether Pinterest will become a more common social media site to most people and perhaps even earn itself the presence of being a household name as it continues to garner more popularity. The question is whether the 140 million dollars raised in seed money to launch the beta of Pinterest will pay off. Without a clear monetization path it is tough to say how well Pinterest will do in the future, because let’s face it, without money you really cannot do much in business these days.

Seed money is an excellent way to get started, but it can only take you to a certain point before investors start to expect a monetization plan and look for a return on investment or pull their funding. There are many possibilities for Pinterest to make money. Perhaps having a business page such as Facebook and then charging businesses for more exposure or ad space would be the the easiest and most commonly used way to make money for a social media site such as Pinterest that has a lot of users.

There are many other possibilities for Pinterest.com, as they could go in a multitude of directions. If they decide to make their business pages a little more robust than Facebook it is possible they could even develop a platform for businesses to directly put up products and services on their business page and sell straight off the Pinterest website. With over one hundred million dollars invested in Pinterest.com, I would hope that whoever is pulling the strings has a strong plan for monetization, regardless of the user base potential of such a social media site.

Being the fastest site to get to over 10 million users is not an easy feat, however it is also something investors should look at carefully. Simply having users does not make a website valuable if there is not a strong plan for monetization. Facebook’s market cap is much lower than its IPO because investors realized that having a lot of users does not necessarily mean making more money when most people do not click on the ads or ever buy something because of an ad they saw on Facebook. This applies to Pinterest as well. If the users are not looking for a business while they are navigating the website, than it is likely that they are not going to click on an ad and buy something. Therefore, investors should be careful to invest heavily in a website simply because it has a lot of users if there is not a clear indication that the user itself is frequently looking for a business.

With so much money invested in Pinterest already and a strong user growth rate it is unlikely that Pinterest will be just a fad. Building a business oriented component to Pinterest would be the easiest way to monetize such a site, and it is likely this is already in the works. With that said, any business looking to expand its online presence and get more traffic should pay close attention to Pinterest, for being the first business to utilize such a site for business will give you an edge over the competition.