Category Archives: Monetization


Making money on mobile. Multiple barriers but some success.

This piece on mobile advertising and marketing ended up running rather long, but it is broken up into three sections for easy viewing:

If you want to go right to the success cases, feel free, but I hope you will find some useful information in all the sections on things to consider before you jump into mobile advertising and marketing.

Creating monetizable events on phones is difficult.

Phones are not easy to make purchases on.

Amazon and Apple have solved this issue to some degree by getting you to enter your payment information via a computer when you setup an account or make purchases, and subsequently it only takes a click or two to make a purchase on your phone. But if you are coming to an entirely new site and are trying to enter all your personal and credit card information, you know how difficult it can be. Small screen size and less than precise input devices increase the friction in purchases to the point that many people give up.

Purchasing on phones is not a habit.

Difficulty alone stops most transactions, but there is also the issue of phones seeming less secure or at a minimum the process is just new. As humans we are creatures of habit.  Text messaging and social networks have allowed us to use our phones to communicate with friends and family as well as the broader world. But when we actually want to make a  purchase, most of us have the option of forgoing intense research and purchases until we are on a more familiar and capable device. If you want to purchase a new TV online, are you going to use your phone to research the options? Possibly, but most of us will do the research and especially the purchasing on a regular computer . This may change as tablets become more the norm, but mobile is still more of a social, entertaining experience vs the place you go to make purchases. Even when we start using tablets as our primary computer, the mobile element will not be the key element. If you make a purchase on your tablet while sitting on your couch, is that any different then making the same purchase on a notebook computer?

Display ads are not effective on mobile devices.

While many of us are using our phones to access the Internet more than we are using our computers, the ad industry has had considerable difficulty finding ways to effectively advertise on mobile. Take the example of games. Games have done incredibly well on mobile. It is easy for a person to just launch an app and play a game when they have a couple minutes of free time. Display ads are common in ad supported games, but a review of developers discussing mobile ad revenue shows that the money made on mobile ads in minimal. Even beyond games, consumer are used to simply ignoring display ads, and it is likely that the minimal clicks on mobile ads are often misclicks. We are talking about small screens here.

Three examples of mobile struggles.


No industry is more desperate to find new ways to monetization in the digial world than the newspapers. Their monopoly on local coverage has been erroded by social networks and greater access to niche content. While most newspapers have maintained a substantial reach by having a comprehensive Internet pressence, digital ads and services produce less than 20% of what print ads do. Despite the desire to find new revenue models and more people accessing their content on phones, less than 1% of newspaper’s revenue is coming from mobile


Facebook’s recent IPO filing indicated they have no revenue from mobile. Here you have one of the most successful social networks, that is valued at close to 100 billions dollars, and they get zero revenue from mobile. In the past two week Facebook has gotten agressive about mobile and advertising in general, but their slow movement into this area points to the fact that mobile doesn’t have an easy path to monetizing attention. Since Facebook revenue ultimately comes down to advertising, it is worth noting that while Google might not know as much about us, search usually signals intent in the moment. Intent is much more valuable for lead generation and sales then just knowing what I “Like”. Facebook might get into the search business, but without it, it will be tough for them to compete with Google for some of the most lucrative ad purchasing verticals including on mobile.

Social Ad Networks

My final example is from personal experience. Cross platform ad networks value mobile clicks significantly less than those made from a computer. I run MyLike ads on the @free Twitter account, so I have quite a bit of experience with their network. For several months, MyLikes was paying just 2 cents per mobile click while at the same time paying as high as 35 cents for a click made via a user on a computer. They did this because advertisers, particularly those who were looking for a specific action from their ads, like a sale or a sign-up on a lead form, were unhappy with the performance of mobile users. MyLikes has since stopped the payment differentiation and made all clicks equal. Their justification for changing back to equal pay was the branding benefits of ads.

Where mobile does work.


The idea with mobile is that you can be reached anywhere. Many retail business and services have to get you to leave your house to visit them. If you can be reached while you are already out and about, these businesses have already overcome the first step. For mobile, very basic SMS texts tend to be a powerful way to reach people on their mobile devices. Local businessess, particuarlly restaurants, have had success running SMS text lists. The most effective campaigns combine mobile delivery of messages with discounts and free offers to get customers in the door, make them familiar with local businesses, and get them into new routines.

Audience Acquisition

You might not make the sale with mobile, but it is a good venue to start acquiring potential leads.  Sales funnels (how you get from first exposure to actual sale) vary greatly, but if you can get a potential customer to “Like” your Facebook page, follow on Twitter or signup with your email or SMS text list, you have started the process. That connection can lead to multiple touch points, build awareness and give you a venue for a call-to-action. In many cases, you are not going to get these connections with display ads. The “ad blindness” I talked about ealier still applies. There are effective ways to get these connections including providing compelling content, curating your industry, running contests or even paying for in-stream ads. In-stream ads can now be purchased on Twitter as well as Facebook, or if you are looking for a lower cost option, you can work with 3rd party brokers or even publishers. My startup @free has built both our audience as well as our own revenue model on in-stream advertising and sponsorships.

Phone Calls

Google continues to be on the cutting edge of what works in advertising, and they are doing it by going back to the future. While restaurants have been successful using SMS coupons and free offers to get people in the door via mobile, this approach doesn’t work as well for less universal services (i.e. everyone eats each day, we don’t need a plumber each day). For most industries, intent is extremely important. Google has solved the issue of actually creating leads and sales on mobile by allowing the call-to-action to be a phone call. Real sales are being generated by this method. Fortune has an excellent article on the subject. Here are a few of the businesses experiencing success with Google mobile ads:

Naturally, the approach has proved popular with firms that have long relied on call centers to generate new business. Take Esurance, the San Francisco-based auto insurance firm that provides services online. The company says that click-to-call ads have improved the efficacy of its marketing campaign some 25%. While it won’t release specifics, it says calls coming from such ads were more likely to result in sales than typical phone inquiries. “So many people want their final transactions to be over the phone,” says Esurance Director of Online Marketing Tolithia Kornweibel.

1-800-Flowers (FLWS) is another example. The company says it’s customers were two or three times more likely to click to make a phone call from a handset than to click on anadvertisement on a desktop computer. Cable provider Comcast (CMCSK) has found the same to be true. Since starting to use mobile ads in June last year, the company says it has seen a surge in mobile sales, with 270% greater click-through rates on mobile than desktop devices. Mobile advertising now drives more than 10% of the company’s online sales, up from virtually nothing last year.

While these examples are for businesses who have call centers, local businesses can also take advantage of the phone call option because the number of potential customers is much smaller and can easily be handled by your existing sales teams or even just taking the calls directly as a small business owner.

Mobile is obviously a substantial growth area, but knowing what technology to use to reach users in a meaningful way is a key consideration in actually making mobile work for your business and industry.


Pinterest adds disclosure about how they (might) make money. Conversation with Pinterest CEO.

Ben Silbermann, the CEO of Pinterest, called me this morning after reading my story on copyright issues. While he didn’t want to go into detail about how they will continue to address that issue, he did provide me with his take on the affiliate link modification story.

Ben told me that it was never Pinterest’s intention to be deceptive. He indicated that the use of Skimlinks was a test, not a business plan, and that Pinterest had stopped using Skimlinks a week before I wrote the original story on the subject.

My Error

The image I provided with the original story actually showed a piece of code that didn’t relate to the Amazon’s affiliate program. At least one reader commented on my blog that the link I listed wasn’t an affiliate link, and several people emailed me indicating that they couldn’t replicate the link modifications when posting pins. This makes more sense now, as Pinterest had stopped using Skimlinks a week before I published the story.

Pinterest’s silence on the affiliate link story.

Despite the popularity and reach of the Pinterest, the compnay only has 16 employees and the vast majority of them are focused on development issues. Ben indicated that Pinterest is still figuring out how they best want to respond to issues as they come up.
A Google News search of the term “Pinterest” returns hundreds of stories and guides each day about the service. Ben indicated that Pinterest wants to be transparent, but as a startup trying to continue to develop a compelling product, their team doesn’t want to be constantly reacting to every new article or story about their business.

Pinterest has updated their site with a disclosure.

In order to provide transparency and clarification going forward, Pinterest added a new section on their help page to address any possible future questions around the monetization issue. The new section is called “How does Pinterest make money?”:

Right now, we are focused on growing Pinterest and making it more valuable. To fund these efforts, we have taken outside investment from entrepreneurs and venture capitalists. We’ve tested a few different approaches to making money such as affiliate links. We might also try adding advertisements, but we haven’t done this yet.

Even though making money isn’t our top priority right now, it is a long term goal. After all, we want Pinterest to be here to stay!

Skimlinks was not a monetization effort, but it was testing.

Ben stated to me, “Our focus right now is not on monetizing, but we have tried a few things out to better understand how people use the service. We want to be a profitable company, but we want to make sure whatever model we eventually use, works with customers. We haven’t decided on one way to do it.”

Ben indicated that Skimlinks was more about testing how people used Pinterest rather than a long-term plan for monetization. Using Skimlinks, Pinterest was able to test a number of things including whether users would make purchases when linked to from the Pinterest site.

In the end, most Pinterest users, who were aware of the link modifications, wanted some type of disclosure, and they got it. Whatever route Pinterest ends up taking to a sustainable business model, it seems they have taken the approach that users need to be aware of some of the behind the scenes testing that may go on in the process.

Reaction to Pinterest modified affiliate link story followup

What was learned from the Pinterest link modification story.

Additional Update (2/15)Pinterest adds disclosure about how they (might) make money, my error about Skimlinks and a conversation with the Pinterest CEO.

My post on Pinterest quietly generating revenue by modifying links to add affiliate codes got much more coverage than I ever could of imagined. 35,000+ unique visitors in 36 hours and write-ups in most of the bigger online social/tech publications including the New York Times, CBS News, Tech Crunch and two posts by Mashable. The number of follow-up stories and discussion led to some confirmations as well as new insights which I want to briefly share here.

Pinterest’s terms of service pretty much allow them to do anything they want with users’ pins.

Sarah Carling  posted a key part of Pinterest Terms of Service in a comment on my previous post:

you hereby grant to Cold Brew Labs a worldwide, irrevocable, perpetual, non-exclusive, transferable, royalty-free license, with the right to sublicense, to use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content

I don’t particularly fault Pinterest for  such broad language. It allows them flexibility in deciding how to continue to develop their service in the future. This is true both in terms of how they display images and how they make money.

Pinterest isn’t legally obligated to disclose their affiliate link modification.

No lawyers jumped into the discussion, but I think this comment  by Tricia Meyers  accurately conveys the consensus from reaction across the web.

It is not illegal. There are guidelines about posting endorsements of items and then including affiliate links. But, in my opinion, Pinterest is not endorsing the items–users are.

Alicia Navarro the CEO of Skimlink commented as well with her interpretation:

With respect to FTC rules on disclosure of affiliate links, the law is that any content creator that is *endorsing* or *recommending* something and obtaining financial benefit as a result of this endorsement, needs to disclose it. In this case, Pinterest are not pushing people to buy something because they get paid for it, they provide a platform that drives traffic to retailers and they are being rewarded for providing that service.

Pinterest users like the idea of modified links, but they would love it with disclosure.

Almost universally, commenters seemed in favor of  link modification as a form of monetization. It is unabtrusive, provides revenue, and really only affects retailers and those who want to pin affiliate links on Pinterest for their own profit. Some thought my original post was absurd, and there was no story, but most commenters thought Pinterest should have more clear disclosure of the practice. There are over 50 comments on my original blog post to get a feel for reaction, and it is also worth checking out Hacker News for some detailed discussion of key issues. Reddit was late to to pick up the story, but there is some active discussion. If you want to see the reaction on Pinterest itself, there are a few comments from people pinning my original blog post.

A very similar situation happen to Posterous in April of 2010.

An almost identical link modifying system was implemented by Posterous just under two years ago. They too didn’t disclose, but apologized once it was made public. The comments at Hacker News seem very similar to the reaction to the Pinterest story. Obviously modifying users’ links on a blog platform is much different then modifying pins which are rarely original content.

Pinterest has been using Skimlinks from the beginning.

Note this section was added at 3:40 PM EST.

Adrianne Jeffries of BetaBeat interviewed Skimlinks CEO Alicia Navarro. Alicia persuasively answers my objection to retailers being the only one’s who may dislike affiliate links being inserted or links being modified. In addition, Alicia makes several surprising statements that indicated in no uncertain terms that Pinterest has used Skimlinks from the beginning. That would mean Pinterests use of Skimlinks has been going on for over a year. She states:

Pinterest has been using Skimlinks from the beginning, it is the same as any other web site that uses affiliate marketing.


Another way of putting this: retailers have never had this traffic for free, Pinterest has always used this form of monetization, and it is an incredibly valuable service that merchants should be delighted to pay for.

More interesting reads related to the Pinterest affiliate link story.

Digital Trends decided examined how alternatives to Pinterest are using modified links for revenue and how they disclose it.

The Skimlinks CEO has been active in commenting on the story including writing a blog post.

Tech Crunch wrote about why they think the real story here is the power of Skimlinks as a revenue generator.

Pinterest is quietly generating revenue by modifying user submitted pins.

Additional Update (2/15)Pinterest adds disclosure about how they (might) make money, my error about Skimlinks and a conversation with the Pinterest CEO.

If you post a pin to Pinterest, and it links to an ecommerce site that happens to have an affiliate program, Pinterest modifies the link to add their own affiliate tracking code. If someone clicks through the picture from Pinterest and makes a purchase, Pinterest gets paid. They don’t have any disclosure of this link modification on their site, and so far, while it has been written about, no major news outlet has picked up on the practice or its implications.

Pinterest doing this is big news in my opinion for two reasons:

  • Pinterest is monetizing their site while in the early beta stage, which is almost unheard of for a newish social network.
  • Pinterest has taken this action in a quiet, non-disclosing way.

How long this has been going on isn’t clear, but it has been at least a month as Lindsey Mark wrote a blog post that mentioned it on January 5th. In my case, I saw a tweet from from fellow Lawrence social media user Debbi Johanning that linked to an article Why I Don’t Mind Pinterest Hijacking My Links. That blog post was based on a post by Joel Garcia on an affiliate marketing blog which pointed out the practice, but also explained that if an affiliate link was in the original pin, Pinterest wouldn’t modify it.

How Pinterest modifies its users’ links.

An example of Pinterest adding an affiliate link to one of @free’s pins.

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.

Pinterest is taking the unique path of generating revenue early.

Historically large social networks have focused on user growth with little regard to making money. Twitter and Facebook went years before doing any advertising, and more recently, popular services like Instagram and to a lesser extend Path are almost dismissive of how they are going to make money. The idea of growing big and figuring out the business later is dangerous for small businesses, but in the world of venture capital, it is absolutely the norm for rapidly growing web sites and services aimed at consumers.

That Pinterest is breaking from this mold, and getting revenue while it is still technically in beta is news on its own. I wrote previously on how Pinterest could be the most valuable social network for retails sales, and in Pinterest’s case, they have found a relatively easy solution to start capturing the value of the network before they even leave their beta phase.

How they are doing it with no disclosure to users feels weird.

As most bloggers are aware, when you use an affiliate link in your post, you need to provide some type of disclosure either by it clearly being an ad, mentioning it is an affiliate link or at a minimum providing some type of prominent disclosure that your site features affiliate links. This is done, because you have a financial interest is promoting the product.

In Pinterest’s case, since they are not creating the content and are inserting the links automatically, they might feel that they are not promoting affiliate linked pins any more than other pins, and thus they don’t need to disclose as the placement is not affected based on the financial gain.

skimlinks own site has a FAQ section about disclosure, and it would seem their own recommendation would be that Pinterest make a disclosure.

We encourage our publishers to disclose to their users and comply with the FTC regulations which state… “When there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement, such connection must be fully disclosed”.

When using our URL Shortener to include product recommendations on Twitter, we have provided some disclosure guidelines here.

You could also add disclosure to your site by joining our Referral Program and using one of our disclosure badges.

One specific, problematic issue is that when individual online stores pin their own content, it is unlikely they would insert an affiliate code. But if the store has an affiliate program, it is highly likely that those links now will have an affiliate code in them that gives Pinterest a percentage of any sales. Not disclosing this modification is putting individual stores at a disadvantage when they and their customers are putting in the work of adding pins.

I, like many people, don’t have a problem with Pinterest making money off of user content. The links are modified seamlessly so it doesn’t affect the experience. Pinterest likely should disclose this practice to users even if they aren’t required to do so by law, if only to maintain trust with their users.

Do you care that Pinterest is modifying your pins? Do you think they should disclose it to users? I would love to hear your thoughts.


Warby Parker Pinterest follower numbers show how new Pinterest is

Pinterest for Businesses and Brands

This is the fifth post in a six part series on Pinterest.

What businesses should use Pinterest?

In order to determine if you business is a good fit for Pinterest, it is best to understand why Pinterest is so popular, and then try it out for yourself once you understand the basics.

Most businesses should be able to find a use for this network, but certain industries are a perfect fit for Pinterest based on the visual nature of their offering and what is already popular on the network. These industries include:

  • Art
  • Photography
  • Restaurants (anything related to food)
  • Weddings
  • Vacation Destinations
  • Tourism
  • Clothing
  • Home Decor

This list is far from comprehesive. After a few days on Pinterest you will likely see other popular pins as well as better evaluate if there is a way to incorporate your business into what is being pinned.

Business benefits of using Pinterest


But how will social media result in profit…

This is a common question in social media, and thankfully as more case studies are published, we are actually getting more definitive proof that social media can clearly increase profits with less expensive and more effective branding, advertising, customer service and by using social media for other business operations. That said, traditional social media networks (we have reached the point where Facebook and Twitter are traditional) are not known for leading to direct sales, especially in the case of first exposure to a product. I have made purchases after seeing just one tweet, but generally, like most consumers, I need to see references to a product multiple times, and then only when I have a significant need, do I make a purchase. Pinterest can accelerate that process.

Path to purchase

For retailers, the path to purchase from a social networks is no more direct than on Pinterest. “See it, like it, buy it” happens frequently (I once again cite the in-depth case study of my wife 😉 ). Even in cases where the path to purchase is not as direct, rarely do you have social network were linking to a for-sale items is done so frequently, you have clear social proof of the desire for the item, you see a picture of it, and where you are only one or two clicks away from being on an e-commerce site.

Perhaps the best gift idea solution ever.

Empathy is a big part of giving gifts. Some of us can put ourselves in the place of the recipient, and come up with something that they would uniquely like to receive. If you are giving a gift to a Pinterest user, you should never again be at a loss for gift ideas. I predict that in 2012, the use of Pinterest to come up with gift ideas will become a massive phenomenon, and this will naturally lead to Pinterest being THE social network that really drives consumer sales.

Drives significant traffic

In the sixth part of this series, I am going to provide further links and resources for exploring Pinterest, but I want to share a few now that stand out.

  • Pinterest is now driving more traffic to the Real Simple web site than Facebook . (Link)
  • Warbly Parker, the hip but inexpensive eye glass retailer, reports that 11% of their social traffic is coming from Pinterest. 18% from Twitter. (Link)
  • Like many early bloggers, Kate Bryan ran a blog that was based around her interests, but it never generated many readers.  She blogged about her professions of hair styling and jewelry making, and also her craft projects. Hair styles are extremely popular pins on Pinterest. Kate started pinning her own work  and rapidly started getting traffic. In five months she achieve over 14,000 new subscribers to her site as well as getting over one million page views from Pinterest. (Link)

These stories are obviously atypical (especially the last one), but they do point to the amazing upside that exists with Pinterest to drive traffic when original content aligns with viewer interest.

Natural audience segmentation

An honest assessment of my own personal network and @free readers who have signed up with Pinterest, shows that women dominate this network. @free followers on Pinterest are 95% women (compared to 58% on Twitter). And while age is difficult to determine, at least 80% of readers look to be under 30. If that age range is your demographic and what you offer has a visual appeal, you need to at least try Pinterest. As a 30ish male, I think Pinterest has long term potential in almost every demographic (most of us have some desire to collect things and ideas), but right now, this age range and gender is dominating.

Aspirational audience research

@free doesn’t follow back everyone who follows us on Twitter. It would be truly monumental task, but I made the decision to try to follow back @free readers who follow us on Pinterest. While reading thousands of tweets an hour would be difficult, quickly looking through pictures is much easier and also points to the aspirations of what part of the @free audience is interested in and what their goals are. If Twitter is what you are interested in or doing right now, Pinterest is a view into what you want to do with your life. Goals, dreams & fascinations are all on display here. As I shared at a recent Lawrence Social Media Club meeting, I have actually learned a couple things about my wife’s interests that I never would have known without Pinterest (and that is after being together for five years).

How should you use Pinterest for your business?


Compelling Images

At a minimum, businesses of all types should put an emphasis of having at least one visually compelling image on any piece of content they produce. This allows you and others to pin the image with a link to your content.

Adapt to the medium

@free is about providing the best of what is free, but it is also about curation in general. In the case of Pinterest, I started by pinning the best permanently free offers. I was working up a list in Trello to create a page on the @free web page to list permanently free offers, but I thought it would also be helpful to put this informaiton on Pinterest. While I will continue adding these free offers over time, I quickly became aware that it wouldn’t be enough content to keep @free active on Pinterest. Because of that, I experimented by re-pinning other useful, fun and interesting pins our readers shared. While the free offers do get repinned, I have found that the highly curated content (we post around 1 pin for every 100 we see) that doesn’t revolve around free gets the most repins and likes. There is certainly the danger of confusing your branding by doing this, but at the same time, you have to adapt to the networks and what makes it so powerful. AMD is active on Pinterest, but not surprisingly is it is difficult for them to compete with normal pin topics that are going to be much more popular and of interest in comparison to pictures of new computer chips.


What resonates with your followers can be unexpected. Once you exstablish a tone for your account, consider experimenting with a few types of pin ideas to see what resonates. With @free, a DIY cinder block bench was our most repinned pin, and I didn’t expect to get more than a few re-pins.

Make it a process

Consistentcy is a key component of any social media plan. Whether you are one person running a small business or have a larger organization, you need to make sure new services  allign with your goals and fit into your work flow. This could be as simple as planning to use Pinterest a certain number of times a week or committing some of your free time to pin. In terms of staffing, Pinterest is one of the more enjoyable social networks, so you are likely to find a few people in your organization willing to pitch into the effort.

First mover advantage

Despite millions of users on Pinterest, very few brands and businesses have signed up, and of those, very few are active. Remember when I mentioned the traffic Warby Parker was getting from Pinterest? You might have thought they had a massive number of followers. As you can see to the right, as I write this, they only have 211 followers. The newness of businesses on Pinterest presents a unique circumstance were your business can be one of the first to actively use this already established social network.

If you are a business using Pinterest, feel free to post a link to your page in comments. I would also appreciate it if you also put at least a line or two about your experience so far.