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Pictures appear on the smartphone sharing application Instagram.
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It’s almost payday for Pinterest. The four-year-old social network that functions as a digital scrapbook will soon begin letting marketers advertise to the company’s nearly 50 million monthly users. By summer, a select number of advertisers will be able to place promoted posts in category feeds and user searches. Pinterest wants these visual ads to be viewed more like magazine ads than typical online ad units. In an interview with the Wall Street Journal, Pinterest ad chief Joanne Bradford equates them to “works of art.” It’s a smart strategy aimed at siphoning more ad dollars away from legacy media formats like print and television, but it will place Pinterest in direct competition with photo-sharing app Instagram, which has the exact same plan.

Digital advertising has long been a volume game. Marketers can place advertising in banner ads, promoted tweets or Google searches and pay just a few pennies per impression. Though such marketing has become lucrative—eMarketer estimates that digital advertising spend in the U.S. will pass $50 billion in 2014—it doesn’t begin to approach the money companies spend on brand advertising common in magazines and on television. TV commercials alone commanded more than half of the total global ad spend in the first half of 2013, according to Nielsen. These traditional brand ads are aimed at increasing affinity for a product or company, rather than converting direct sales. They’re the type of spots that appeal to the world’s largest marketers and have driven up Super Bowl ad prices to dizzying heights in recent years.

Now both Pinterest and Instagram have said they want a piece of this brand advertising pie. Because both social networks are highly visual, they may have more success than Facebook or Twitter luring brand dollars. Pinterest, in particular, is something of a commercial oasis, with people regularly sharing images of clothing, food and jewelry that they covet. The startup has already been experimenting with promoted posts for six months, enlisting marquee brands like Four Seasons and Unilever’s TRESemme to test out the ad units. Pinterest hasn’t disclosed who its first paid marketers will be, but the company is bullish on the value of its ads. The social network is seeking between $1 million and $2 million for initial ad buys and pricing CPMs between $30 and $40, according to Ad Age (for comparison Twitter’s first big ad product, promoted trending topics, reportedly cost $80,000 when it debuted in 2010).

Instagram isn’t quite as consumer-focused as Pinterest, but it’s a much larger platform with 150 million monthly active users, all of whom are on mobile. The Facebook-owned company began testing promoted posts last fall with select brands such as Levi’s, Michael Kors and Lexus. The company recently inked a deal with advertising conglomerate Omnicom estimated to be worth between $40 million and $50 million, showing that the appetite for Instagram ads is quickly increasing. In addition to photos, advertisers can also post 15-second videos on the social network, an ad format that’s still rarely seen on social networks but is more valuable than still images.

Ultimately, there will likely be space in the market for both platforms to grow. Instagram has said that its initial batch of ads increased brand awareness for the companies involved, and Pinterest touted similar successes for its experiments with promoted posts. Large-scale brand campaigns on social media are just getting started.


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