Pinterest Beats Facebook, Twitter in Online Shopping
A recent Shopify study analyzing 37 million visits driven to its client stores from social media traffic revealed the unsurprising news that Facebook (NASDAQ:FB) still firmly dominates the landscape, driving almost two-thirds of social media traffic to Shopify-owned stores in the 101 countries the e-commerce site operates in. The study examines worldwide performance but does not detail results by country of the traffic’s success.
Research focused on U.S. consumers, including Shopify-generated data, indicates that for the second quarter in a row, Pinterest is leading in U.S. e-commerce conversion rates. Digital marketers are eyeing these stats as Pinterest begins to roll out its sponsored pin program and stores decide where to allocate their social media budget, which is projected to account for 18 percent of retailers’ total advertising budgets within the next five years.
Seventy-one percent of U.S. adults online have a Facebook account, a massive number of users that partially drives the social media platform’s high rate of overall traffic to advertisers and is seen as the obvious choice if a company is making an announcement such as introducing a new brand. But according to data technology firm BloomReach, which researched the conversion rate of advertising into sales, domestically, Pinterest beat all other social media sites and accounted for 22 percent more sales than Facebook.
Advertisers are considering these metrics as they voice concerns about Facebook’s recent decision, first reported in Valleywag and highlighted in Eat24’s now-viral “breakup” letter, to drop advertisers’ organic page reach from 16 percent two years ago to 1 or 2 percent now. Seen as a move to steer advertisers into its paid model, retailers and other companies that previously allocated a significant portion of their advertising budget to gain Facebook followers are unhappy that they are now being asked to pay to communicate with their fans.
Pinterest, now valued at $3.8 billion, accounts for 24 percent of all U.S. social networking shares, with Facebook maintaining a strong margin at 43 percent. In the U.S. e-commerce space, Pinterest held a 1 percent lead over Facebook, at 40 percent. According to a Shopify study of Pinterest users, they are 10 percent more likely to buy a product than those coming from other social media sites and generally spend more than double on their orders. Last year, 70 percent of Pinterest’s content was user generated, and, assisted by its visual design, was credited for tripling online retailers’ revenue during last year’s Cyber Monday.
Pinterest is leveraging those conversion numbers with its introduction of sponsored pins after a small but successful round of testing six months ago, expected to be rolled out site-wide by next quarter. AdAge found that while no official date for the introduction of sponsored pins has been announced, Pinterest is initially asking prospective advertisers for spending commitments between $1 million and $2 million. There is no current word on if that pricing plan will decrease in the future.
Trailing behind in e-commerce metrics is Twitter (NYSE:TWTR). With the same user numbers as the younger Pinterest but lagging behind in conversion rates and other data, Twitter doubled its ad revenue last year to over $1 billion and expects that number to reach $2.4 billion by 2016. The strong positive revenue outlook is partially due to Twitter’s introduction of 15 new ad products, which will be released in batches starting next week. Trying to fulfill its investor obligations made when the company went public last year, the app-install ads will only target Twitter’s mobile base, where the company earns 76 percent of its ad revenue.