“Many observers have suggested that Pinterest bought the recipe site for its content. Not so, says Eric Fader of Ignited, who argues that the secret sauce is Punchfork’s technology and what it will allow Pinterest to do”
Pinterest’s recent acquisition of Punchfork has largely been misinterpreted by the industry and onlookers as merely a content-centric acquisition. While Punchfork’s database of recipes certainly will have value for Pinterest, in reality there is a Trojan horse in this acquisition that was the real focus of Pinterest’s move: the technology that powers Punchfork.
Combining the power of a search engine indexing content, the popularity of content based on how often that content was shared on social networks, and an intelligent display of metadata to enhance the search results, Punchfork had a powerful engine under its hood. And so with Pinterest scooping it up, the move can be seen as a marked shift from a user-generated content approach to one that leverages search technology to discover, index, and present content to its user base.
Punchfork’s secret sauce
Punchfork’s founder, Jeff Miller, leveraged his technical skills as a quant trader to index recipes from across the internet and mash up this information with social signals from social networks (Twitter, Facebook, Stumbleupon and Pinterest) to develop a popularity score. These popularity scores assist consumers in discovering the best recipes for a given type of food or particular diet. Miller also developed a robust API that was Punchfork’s sole source of revenue (aside from some tests with advertisements on the site). Punchfork’s API was available across multiple tiers, from a low-volume free tier to a $995-a-month tier.
So as observers have pointed out, Pinterest and Punchfork were certainly an obvious match due to their similarities: a grid-based aesthetic with visually inspiring photos and content, and recipes are one of the most popular types of content on Pinterest already.
But long term, the key value for Pinterest is Punchfork’s robust and well-documented API.
Implications for Pinterest
The divide between content and commerce is closing. Pinterest is certainly at the forefront of helping consumers discover products and content of interest, but currently consumers can’t make a one-click purchase of all that merchandise they’ve painstakingly collected and pinned. This poses a problem for Pinterest – and an opportunity for Google, Amazon, and Facebook to take a greater portion of the ecommerce market share.
Pinterest must move quickly and leverage the technology and innovation from Punchfork to execute across three main areas:
- Releasing a publicly accessible and monetizable API
- Developing paid advertising
- Enabling consumers to make seamless purchases of products they discover
Release an API already!
Pinterest has a wealth of products within its database that could be leveraged by publishers to monetize traffic and provide a source of revenue for Pinterest. This offering would combine the interest of brands with a wealth of products already pinned within Pinterest, and sites that want to monetize their content and traffic. Pinterest could easily create an offering where merchants log into Pinterest, determine how many of their products are already pinned within Pinterest to entice them into a PPC, CPM, or CPA advertising offering.
Paid advertising offerings
Pinterest has largely focused on growing its user base and, aside from user backlash around its use of Skimlinks, it hasn’t yet revealed a revenue model. It seems inevitable, though, that Pinterest will have to develop a revenue stream(s) from sponsored pins and/or sponsored profiles, along with recommended pins and profiles in either a CPA, CPC, or CPM format. These would mirror successful offerings from other social networks such as Facebook and Twitter, and make it easier for brands and agencies to incorporate it into a respective media buy.
More often than not consumers come across compelling images of products on Pinterest but cannot find out where to purchase those items, resulting in a lost opportunity for Pinterest and the merchant. Using technology from the Punchfork acquisition, Pinterest will be able to fix this problem in a variety of ways:
Image recognition for unsourced pins
Numerous startups are attempting to leverage image recognition for monetization, ranging from GumGum applying advertising to relevant imagery, to Stipple attempting to be the image genome. In the context of Pinterest, users often upload a photo saved from a website or a camera and neglect to link that product to the manufacturer or store where the item can be purchased.
But if Pinterest were to incorporate a form of image recognition, the company could attempt to associate images of products without a source to sites that sell that particular product. For example if I uploaded a photo from my camera depicting a tie from Everlane and didn’t link back to everlane.com; Pinterest may be able to automate identification of that tie via image recognition.
Enhanced Product Information
Currently pins offer very little information to Pinterest users with the exception of anything contributed directly by the user that pinned the image. Pinterest could enhance the product information that is associated with particular images by incorporating data such as pricing, availability, and product specifications. Pinterest started to address the pricing aspect in an archaic fashion by automatically capturing information when pinned from sites such as etsy; however the future may lend itself to message-based protocol where products are matched to retailers via an API. This bi-directional API could enable larger retailers and smaller retailers to provide timely updates to prices, promotions, and availability. For example if I came across a new line of nail polish from Sephora pinned on Pinterest, I would be able to see availability, up to date pricing information, and any discounts that could be applied to a potential purchase.