Pando

Has Instagram accidentally taken out Pinterest on its way to taking out Snap?

By Sarah Lacy , written on March 15, 2018

From The Disruption Desk

Despite being smack in the middle of its demographic, I have never been a Pinterest user. I actually just signed up again to try to see if the service was more compelling now.

I make Halloween costumes for my kids. I am redesigning part of my house right now. I am an avid art lover, can’t decide what to do with my hair, and am trying to decide on a new tattoo. Other than planning a wedding, I have pretty much every core inspiration need that Pinterest should cater to.

I spent about three minutes and pinned two things before getting bored of seeing repeat curved, globe-like bookshelves in my feed.

I still don’t get it.

But you know what has become a feed full of inspiration and ecommerce conversion for me? Instagram. In particular, Instagram ads. I have bought at least a dozen items off of Instagram ads this year alone, which is a dozen more items than I’ve ever purchased off any other social advertising feed.

My Instagram feed is the smallest social graph I have on any social network. It’s mostly where I post family pictures and food. Nothing controversial, nothing political. It’s a happy social network for me. And Instagram excels at showing me things I want. Whether it is Stoned Immaculate “Never underestimate the power of a woman” T-shirt, WildFang’s many feminist offerings, some Wonder Woman tennis shoes I got last year, TIME’s black tennis shoe slippers that have become my kid drop-off and errand running go-to’s, Camp Collection’s retro loungewear, Zsupply’s cozy jersey overalls, or ADAY’s effortless separates, almost all of the new brands I discover and purchase from come from Instagram.

If you are selling any apparel item that is aimed at saving my get-ready time in anyway, is remotely feminist, or vintage-inspired and is priced at less than $70, throw that shit in my feed with a pay with PayPal link, because odds are I’ll impulse buy it on the spot.

I don’t have to go around pinning things to get the inspiration, it comes straight to me. It’s highly relevant. And it’s the only time I can remember not being annoyed by online ads.

We focus so much in Instagram stories stealing Snap’s thunder. But it seems clear to me that any itch Pinterest might have scratched for a mid-40s, American mom, has already been scratched by Instagram.

If I didn’t know why I needed Pinterest five or six years ago, I really don’t know now. There is one thing that annoys me about Instagram ads: How often I click to purchase something and it’s sold out. Which says to me, the format must be working.

Now, Pinterest boosters would no doubt argue that Instagram is a very different product. Gone are the days of Pinterest being described as the last desktop-centric social media company, as the company now bills itself as a “visual search company.”

Said CEO and founder Ben Silbermann last October: "We really think that in the future the camera is going to be the next keyboard. It's going to be a fundamental way that you learn about the world around you.”

Is that a particularly different insight than Snap calling itself a “camera company”? And with Snap being truly mobile centric and reportedly working on a new pair of Spectacles, won’t it be better positioned to compete on that vision?

It reminds me also of how Kevin Systrom described Instagram when we interviewed him on stage in 2008, just after Instagram had sold to Facebook and he considered 100 million users, just a starting point.

I asked then about what would continue to make Instagram distinct from other social feeds. Systrom said:

 Instagram is just fundamentally different. We actually put very little emphasis on text. We put a lot of emphasis on imagery and messages through images….

I think a lot of people out here, if asked in a multiple choice test, they would pick photography company. At the end of the day, we're a communications company. We're a messaging company. It's just the medium in which that message lives is a photo. It's not a piece of text.

And that’s how Instagram’s sells ads as well.

Systrom continued:

The old saying goes, "A photo is worth a thousand words." It's true. You can speak any language in the world, and look at any photo in the world, and know exactly what that person is telling you.

I was following a couple people in Japan, because they were taking interesting photos of food in the fish markets. Then the earthquake happened. All of a sudden, they're driving up and down the coast, taking pictures of the damage.

That's something you can't explain in worlds. That's something you have to see to believe. It's something you have to see in real time to believe, too.

It was pretty moving, actually. That day, our popular page was taken over by images of support for Japan, but also people taking pictures of what was happening over there.

I think, on a small scale, we see this. What happens when we get to 10 times our size, 100 times our size?

Everyone in the world is going to own a smartphone, and every one of these smartphones is going to have a camera. I can't say that everyone in the world's going to own a computer. I think that's really powerful…

And ultimately, that’s the killer for Instagram over Pinterest. If you want to spend money reaching my demographic, whether you like Pinterest more or not, there are just way more of us on Instagram. It’s the same reason Snap is reeling, and it’s one of the main reasons Systrom sold to Facebook when he did. He knew this insight about the camera being the new keyboard wasn’t going to be novel in a smartphone world and he knew he’d need scale.

“I'm not going to settle with a hundred million users. Why would you?,” he said in that same interview. “...I show up to work every day trying to figure out how we can leverage Facebook to be 10 times as big.”

He’s almost pulled that brag off. Instagram has roughly 800 million users, versus 200 million on Pinterest. 500 million Instagram users log in every day. That’s so many more opportunities to sell them things contextually inside visually oriented feeds.

While some may split hairs at comparing Instagram to Pinterest, given it’s not a straight up rip-off in functionality like Instagram did to Snap, that doesn’t hugely matter when it comes to building scalable ad businesses. It only has to scratch the same itch. See Facebook’s decimation of content company’s ad businesses for evidence of that. That Facebook loudly proclaims it isn’t a media company, produces little original content, and doesn’t even always trade in the truth doesn’t matter to advertisers who see that the most news consumption happens on Facebook. There’s an entire Web of functionality that’s distinct from Facebook and Google… that doesn’t stop those none two companies from consuming some 63% to 80% of US digital ad revenues, depending on whose numbers you like best.

Last month, when Pinterest made news (and IPO speculation) announcing rock star none Francoise Brougher as the company’s new chief operating officer, boosters even acknowledged that it any ad business it builds will have to come at the expense of Snap and Instagram.

When offered the options of competing against Google and Facebook, Pinterest is clearly spinning that it’s more of a would-be Google spoiler than a Facebook spoiler with its emphasis on “visual search.” But in a market that is all about scale, does better functionality matter enough to warrant a $12 billion valuation?

Even Pinterest boosters who are bullish on this new visual search direction, note the limitations. eMarketer analyst Yoram Wurmser told USA Today, "It's producing a lot of social referrals to commerce sites. Moreover, the more people use it, the better the system will become.”

Further USA Today none argued that Pinners are “avid shoppers.” 98% of them say they have tried new things discovered on Pinterest, compared to 71% across other social media platforms, according to a none 2017 Nielsen study that was paid for by Pinterest. While it sounds good, that survey doesn’t saw those purchases came via ads or that Pinterest got any chunk of they money. Even if it did,  71% of 800 million is a lot more than 98% of 200 million.

To me it feels like Snap and Twitter all over again. Twitter could never seem to make it’s “real time contextual conversation” differentiation mainstream enough to justify its valuation, and Snap couldn’t do it with it’s “hot millenials only” audience either.

We likely won’t find out if Pinterest fares any better until 2019, when Pinterest is rumored to be aiming for its long-time-coming IPO, after missing it’s none 2017 revenue target, according to The Information.

I can’t imagine Instagram -- which has successfully roped itself off from Facebook’s broader problems-- is any weaker then.