Pinterest plots its monetization strategy

November 14, 2013: 2:56 PM ET

The scrapbooking site looks to grow revenue while keeping its users happy.

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FORTUNE -- Digital scrapbooking site Pinterest is stepping into the spotlight in a big way. In recent months, the company has drawn attention through large funding efforts, high-level hires, and international expansion, but still has yet to reveal a proper revenue strategy. But the startup's recent actions signal not only that it is serious about growing its already impressive audience but also tackling that thorny monetization issue.

Pinterest raised $225 million in October, valuing the company at $3.8 billion. In September, Pinterest also launched an experimental (i.e. non-revenue generating) version of its "promoted pins" campaign. Promoted pins will eventually advertise brands by incorporating company-sponsored pins -- images that display crafts, fashion, recipes, etc. --into the regular content that appears on a user's home page. This is Pinterest's second attempt at monetizing its content after an experiment in 2012 with affiliate link software Skimlinks. Then, users were upset by the lack of transparency in the affiliate links system. This time, Pinterest has plans to label more clearly which areas of the site are revenue-generating.

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As of Thursday, Pinterest also made available some of its real-time data software to developers who work for e-commerce sites. These tools will allow those sites' marketers to know which of their products' pins are trending, and they can use that data to display their popular pins to their customers on the partner's own site. So far, partners include such big names as Disney (DIS), Random House , Target (TGT), Nestlé, Wal-Mart (WMT), and Zappos. Pinterest spokeswoman Malorie Lucich said in an email that one benefit of these partnerships is a seamless user experience on the sites. "While you're browsing, you can pin directly from the site, so there's no need to interrupt your shopping, reading, or browsing." Pinterest is giving these tools away free to developers, but Pinterest's Steve Patrizi, head of partner marketing, told the Wall Street Journal that for users, this move is "good exposure ... to see what Pinterest does."

Building partnerships seems to be a current theme of Pinterest's. On Nov. 6, Pinterest announced that Joanne Bradford, San Francisco Chronicle president and overseer of its digital and marketing efforts, will join as head of partnerships. In her new position, she will be a liaison between Pinterest and advertisers, forging "both commercial and content partnerships globally." According to a statement from the Chronicle, Bradford already has plans to work closely with its parent company, Hearst Corp., to develop a content relationship between it and Pinterest. As head of partnerships, she'll lead Pinterest's sales team once the company starts selling advertising. She held previous positions in marketing and sales at Yahoo! (YHOO), Demand Media (DMD), and Microsoft (MSFT), so her skill set will be useful in helping Pinterest break into more established digital revenue channels.

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On the same day that Pinterest announced Bradford's new position, the company's CEO Ben Silbermann said at Fast Company's "Innovation Uncensored" conference that going public is "not the goal" of Pinterest at this time. With more than 70 million users worldwide (current international markets include the U.K., France, Italy, and, most recently, Japan), the potential for advertising revenue is vast. Pinterest is following in the footsteps of companies like Twitter (TWTR) and Facebook (FB) by starting out with experimental revenue methods and building a strong team of executives. In 2007, Facebook had around 70 million users and made around $150 million in revenue. The following year, revenue increased to around $280 million. In 2010,Twitter had around 70 million users and made $28 million in revenue. In 2011, that number became $140 million. According to research from marketing and analytics software company Piqora, on average, a pin generates 78 cents in sales (this amount has increased by 25% since 2012). Once Pinterest begins to advertise on its site, the potential for revenue will skyrocket.

Jeff Jordan, a partner at venture capital firm Andreessen Horowitz and investor in Pinterest, said that "it's been extremely easy to stay interested" in the company since his firm first invested in 2011. Pinterest's back-to-back news about funding, promoted pins, and new hires are all part of Pinterest's growth, according to Jordan. "When you become one of the largest web properties almost overnight, and you have a very content intensive site," he said, "scaling the business is a Herculean effort."

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