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Founded in March 2010 and launched initially as an invitation-only website, Pinterest is like an online journal of sorts where you can electronically "pin" different pictures to different "boards" representing interests, hobbies, or something as esoteric as how to turn old shoes into really cool flower pots.
One of the most notable things about Pinterest is its staggering user growth.
It's the fastest-growing site in history, reaching 10 million unique users just over a year and a half after it launched. Pinterest today is estimated to have 70 million users, according to Semiocast.
Pinterest has 2.5 billion page views a month and attracts 1,090 visitors every minute, with average site visit length of 15.8 minutes, according to MediaBistro.
But there are more reasons why Pinterest outshines its "competition." Here's a look at why it is the social media standout.
Why Pinterest Is Your Best Social Media Bet
First, Pinterest is a visual tool. The posts rely more on pictures than text to communicate and attract. This means you can quickly, easily, and intuitively use Pinterest to find the things that are important to you.
Facebook, however, doesn't have a picture with every post – some of which aren't worth the time to even look at.
In fact, one of the primary complaints about Facebook is that users are inundated with material they don't want to see and have very little control over what's shown when someone logs on. Facebook and Twitter effectively try to dictate the content to users or employ algorithms to try and establish what they might "like." For all the "likes" we hear about constantly, there is no "dislike" button that could filter the useless material.
Second, Pinterest users can define their online experience – unlike with Facebook. Facebook often shows the user streams of information they don't want. Pinterest users know exactly what they're after and where they can find it.
And, third, if you want to make money as a user or an advertiser, Pinterest is clearly the place to be. Pinterest represents 41% of all e-commerce traffic and an estimated 90% of all U.S. online specialty retailers use the site. A staggering 47% of shoppers have made a purchase based on a Pinterest recommendation, according to Omnicore.
This makes sense, though. The user experience on Pinterest is based directly on images and content you've pre-selected, making selling a very direct process – as opposed to other sites when user experience is guided instead of chosen.
So what does this mean for investors?
How to Make Money with Pinterest
I recently worked on some financial analysis projects with Money Morning Chief Investment Strategist Keith Fitz-Gerald, and one thing he taught me is that investing is all about potential; investors need to understand how a company is going to make money.
That's not difficult when it comes to Pinterest.
Michael Pachter of Wedbush Securities estimates that the site will generate $500 million in ad revenue in 2016.
I think that's conservative because the site engenders two things neither Facebook nor Twitter have – trust and loyalty. Just take into account that 50% of moms would follow a brand on Pinterest if rewards are offered, and 81% of all U.S. women online trust Pinterest, according to Omnicore.
There's just one problem…
Pinterest is still a private company, which means investors can't buy it right now. They'll have to pick up shares just like everybody else after it goes public.
And they might not be cheap…
In May 2012, Pinterest was valued at $1.5 billion. In February 2013, it was valued at $2.5 billion; in October 2013, $3.8 billion; and in May 2014, $5 billion.
But there is a way to use Pinterest as a way to find strong, growing companies: watch Pinterest for the most "re-pinned" products.
For example, the latest fashion trends are uploaded and become extremely in demand. An indication of what's popular is what's getting the most attention on Pinterest.
For retailers, for example, there's a Pinterest API that will allows them to track the top pins, the most recent pins, related pins, and even pins from research terms. A user can find anything and everything of interest, without having to wait for an algorithm or ranking system to show what it wants.
From there, retailers can draw a direct line between what's selling and what's not, which, in turn, leads to earnings – not to mention great investment opportunities.