Pinterest Business Model Canvas

Executive Summary:

I have calculated that Pinterest can make a profit of around $5M using the business model canvas.  Pinterest is a social media website that allows users to discover new products or ideas from all over the internet and store them all in one place.  It is also a way for businesses to get new products or services in front of a large audience.  Pinterest has two customer segments; all social media users and businesses with an online presence.  Today there are 1.8B social media users in the world and 30M online businesses.  Pinterest's current market share is 4% of social media users or 70M and 1.65% of businesses or 500,000.

Pinterest can use their business users to make money through leveraging their 70M users.  Pinterest currently lets business users register as a business, which gives them access to analytic tools.  Currently this service is free, but I believe Pinterest could charge $100 a year for these tools and instantly make revenues of $50M.

In addition, Pinterest can make revenue through advertising.  They are currently testing this concept with promoted pins, which look like regular pins, but a created by companies to advertise their product or services.  Pinterest can charge for promoted pins in two ways.  For large companies that want to launch large advertising campaigns to targeted audiences, Pinterest can charge around $1.5M or $30-$40 CPM.  Pinterest is able to charge this premium because they have a high click through rate of 1.1%.  If Pinterest gets only 10 companies to use promoted pins it will create revenue of $15M.  Pinterest is also testing an advertising concept small and medium businesses can partake in.  They are calling it self-serve promoted pins, which allows users to create their own promoted pin and pay per click.  If Pinterest charges only $1 per click and has 500 companies interested in creating 2 promoted pins that each receive 1000 clicks, they will make 1M in revenue.

All three revenue stream add of up to annual revenues of $66M.  I have calculated the cost to run Pinterest's website to be $61M based off twitter's 2011 expenses.  Therefore, leaving a profit of $5M.

Works Cited:

Twitter's 2013 Annual Report

http://www.statista.com/statistics/278414/number-of-worldwide-social-network-users/

http://www.internetretailer.com/commentary/experts/how-many-online-retailers-are-there-worldwide/

http://searchenginewatch.com/article/2282835/Pinterest-Tops-70-Million-Users-30-Pinned-Repinned-or-Liked-in-June-Study

http://semiocast.com/en/publications/2013_07_10_Pinterest_has_70_million_users

http://marketingland.com/pinterest-advertisers-start-paying-promoted-pins-early-next-month-report-77645

http://blog.bufferapp.com/pinterest-marketing-guide-tips