Everyone knows that Pinterest has exploded in recent months; in the fall quarter of 2011 retailers reported that more traffic to their sites came from Pinterest than from Facebook probably because of Pinterest’ 4000% increase in traffic during that time period.
But fast on the heels of any social network’s success with traffic comes the question, “But how will they make money?” Usually start-ups like Pinterest take a fair amount of time to begin generating revenue, but Pinterest has leapt ahead of the game. How? By making links to products that are pinned affiliate links.
Pinterest is able to do this across their site by using the service skimlinks. This service is rather innovative in that they automatically go through a site and add affiliate links wherever there is a link to a product that has an affiliate program associated with it. While many forums, smaller web sites and even Metafilter have taken advantage of the service, I have to think that the volume of links skimlinks is modifying for Pinterest, has to make Pinterest their biggest client and perhaps the majority of their business. skimlinks makes money by taking 25% of any affiliate revenue generated.
I spent some time trying to spot an affiliate link in the pins of the folks I follow, and I wasn’t able to. I think it’s likely because most of the folks I follow are extremely savvy (and highly self-promotional) and already have links sent to their own blogs and sites (which likely have their own affiliates). So it appears that Pinterest is only adding affiliates when folks link right from a site selling the product.
It’s rather amazing that Pinterest is doing this they could very well be the first social network still in invite-only beta to generate an income this way. The problem is, of course, that they did NOT disclose this fact. Which violates the user’s trust, and likely FTC regulations as well.
Pinterest has yet to comment on this issue; I’m very interested in what they have to say. What do you think? Is this a smart business move on Pinterest’s part, or a bad public relations move?