Pinterest (and Its Users) Might Be a Lot More Valuable Than You Realize

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Online scrapbooking site Pinterest was just valued at $5 billion in its latest round of venture capital funding, just in case you needed a reminder that Pinterest, oft-overlooked as the little sibling of the big social networks, just might be more successful than all of them.

Despite the constant media attention focused on the goings-on of Facebook, Twitter, Reddit, LinkedIn, and even Google Plus and Snapchat, Pinterest is quietly building a real business and even, yes, a media empire. 

While the site is mostly known (and occasionally mocked) for its "pinning" of home decorations, food, crafts, fashion, and other pretty pictures, it's actually a platform that's tailor-made for brands to advertise and sell their products. New York magazine's Kevin Roose succinctly lays out the ideal social network for businesses, and how Pinterest fits into that.

Ideally, you'd want that social network to be filled with women between the ages of 19-39 (since women make an estimated 85 percent of all consumer purchases, and since 19-39 year olds comprise the fastest-growing consumer segment in America). You'd want the network to make it incredibly easy for its users to buy your products, with just one or two clicks. You'd want it to be image-centric and search-friendly. And, crucially, you'd want that social network to put people in a buying mood. You'd want it to be the place where people plan their weddings, pick out furniture for their homes, discover recipes for dinner parties, and plan their outfits.

Not coincidentally, that description is precisely what Pinterest is: a network of young (mostly) female buyers searching through beautiful images of things to buy, make, and enjoy in their leisure time.

And it's growing fast. That $5 billion valuation comes just half a year after it was valued at $3.8 billion in the last round of funding. Pinterest claims there have been 30 billion pins across its network. In addition, with the recent introduction of paid advertising with "promoted pins," the company is starting to turn that popularity into money. 

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People on Pinterest are more likely to purchase goods than users on other social networking sites, which allows Pinterest to charge more for those promoted pins. The site will charge between $30-$40 CPMs (cost per thousand impressions) per Ad Age, far more than Facebook's highest-priced CPM of $6.27. "In other words, Pinterest thinks its users are roughly five times as valuable as Facebook's," Roose writes. In addition, Pinterest sends more referral traffic to online publishers than Twitter, Reddit, and LinkedIn combined, a study from Shareaholic found. Media sites ignore the traffic funnel of Pinterest at their own risk.

This article is from the archive of our partner The Wire.