Rakuten Puts A Pin It, Leads $100 Million Bet on Pinterest

Interest in Pinterest has not piqued. Even as Facebook’s giant IPO and resulting controversy have dominated the news in the online world, Pinterest was in the process of getting a $100 million infusion that valued the rapidly growing social network at around $1.5 billion.

The lion’s share of the investment is from Rakuten. That fact alone is significant. Who is Rakuten, you may ask? This 15-year old Japanese conglomerate is one of the world’s leading Internet companies with 2011 revenues of about $4.7 billion. Among Rakuten’s holdings are LinkShare, Buy.com, and eReading service Kobo. Rakuten operates major ecommerce sites, including Rakuten Ichiba, Japan’s leading online mall, and online shopping services in Austria, Brazil, Canada, France, Germany, Indonesia, Spain, Taiwan, Thailand, the UK and the United States.

Pinning Its Hopes on Pinterest

There is little doubt that Rakuten not only has confidence in the company, it fully expects Pinterest to be a force in ecommerce. Here’s what Hiroshi Mikitani, Rakuten’s CEO, had to say:

“While some may see e-commerce as a straightforward vending machine-like experience, we believe it is a living process where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining.

“We see tremendous synergies between Pinterest’s vision and Rakuten’s model for e-commerce. Rakuten looks forward to introducing Pinterest to the Japanese market as well as other markets around the world.”

The heady remarks of Mikitani sharply contrast with the grumblings heard from the advertising community about Facebook’s revenue potential. Right before the company’s IPO, General Motors yanked $10 million worth of ads from Facebook because the automaker deemed them “ineffective.” But the real reason for the rebuff, according to a recent report in Ad Age, was that GM wanted to run page takeover ads and Facebook said no. Still, other major advertisers have voiced their own lack of enthusiasm about Facebook as an ad vehicle.

The Pinterest Difference

The difference between Facebook and Pinterest from an ecommerce perspective is at the root of what interests Rakuten. Facebook is a platform that encourages ongoing dialogue and interaction, nice to have but potentially passive in nature for advertisers. Pinterest does the same thing, but its visual orientation seems to promote more immediate clickthroughs from images to websites. What’s more, it appears that Pinterest users are more than ready to become buyers.

One example of the ecommerce punch of Pinterest is the experience of Shopify users. Shopify, a hosted ecommerce platform, analyzed data from 25,000 of its online stores, comparing Pinterest’s influence with Facebook, Twitter, and LinkedIn. While Facebook led in referral traffic, Pinterest and Twitter were tied for second place. Pinterest generated more traffic than Google+, YouTube, and LinkedIn combined.

When it comes to directly influencing sales, the statistics are even more promising. In social media driven revenue for Shopify stores from Q1 2011 to Q1 2012, Facebook declined from 89 percent to 82 percent and Twitter declined from 10 percent to 1 percent, but Pinterest increased from 1 percent to 17 percent. Reports suggest buyers referred from Pinterest are spending 10 percent more than those arriving from other social media sites and 70 percent more than those arriving from websites.

According to Shopify, from September 2011 to April 2012, the number of orders generated from Pinterest “pins” has quadrupled. The average Pinterest order of $80 is higher than Google or Amazon and double that of Facebook.

Granted, Pinterest is in its early stages and hasn’t yet figured out how to make money. But it is growing like an Internet weed, and not unlike the developmental cycle of Twitter, commercial usage is already gaining traction. With Rakuten behind it, Pinterest just might push a pin in Facebook’s revenue bubble and become an ecommerce giant in its own right.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

Website: http://www.barrysilverstein.com