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Business Models

Pinterest Business Model – How does Pinterest make money?

Social Networks have revolutionized the world in countless ways. Evidently, Pinterest has had a fairly prominent role in the process. The premium social network was launched in 2010. Since its launch, the forum has been nothing less of an ultimate successful venture.

With over 100 million active users, Pinterest has a market value of approximately $13 billion. The social networking website has cemented its place in the social media sphere with its unique design.

However, the question of how does Pinterest make money has still been a complex topic for discussion.

What is Pinterest?

Pinterest has the honor of being one of the fastest-growing social networks. Furthermore, the venture capitalists absolutely loved it as a startup, and they still do. A social network that lets users save and share pictures, does not look like something new. However, it was an exciting new innovation in the field of real-time communication back in 2010.

The uniqueness of the forum lies in its mechanism. Unlike other social media platforms, Pinterest stores users’ favorite content in the form of pins. What is a pin? It is a kind of a visual bookmark which redirects the user to the website it was created when it was clicked on.

In comparison to other social media platforms, Pinterest did not have any particular target audience. The social network was there for any and everyone to share their content of interests.

How does it work?

As mentioned earlier, Pinterest follows an unusual mechanism of storing users’ data online by pinning images and content. It connects millions of users worldwide who have pinned billions of content pieces. The content ranges from architecture, clothing, design, fan art, interior design, places tutorials and what not!

Pinterest

Business Model

One of the major factors of Pinterest’s instant and substantial success was the clarity in their motive. From the word go, the platform was following a web social catalog business model.

Due to the involvement of pins and pinboards in its business model, the platform was quickly recognized as a dedicated social networking platform.

As of today, the business model of Pinterest includes E-commerce, cataloging, and content aspects with a small portion of social networking features. Much like it’s competitors (Facebook, Snapchat, Instagram, etc.), Pinterest also has an advertising revenue model which benefits from the users’ urge to visiting the ad websites.

Pins

If we are to summarize the entirety of Pinterest into a single component, it would be the pins in the social networking platform.

Pinterest serves as a catalog to save and share pins. When a user registers on the platform, it gives them the right to save anything they like on the internet in the form of pins.

Pinboards

Although separate pins for separate content is extremely convenient for the majority of people. However, for some of us control freaks, it would be better to group similar kinds of content in a major category. Pinboards are exactly that. A pinboard gives the user the right to gather similar pins under a group. Now since pinboards become clusters of information, they can be useful when shared with people looking for a specific topic. So, pinboards have two categories; private and public pinboards. Public pins and pinboards are viewable to every user.

Promoted pins

Since Pinterest does not have any implicit method of attracting revenue, it allows users to share promoted pins. Promoted pins are advertisements, paid content by renowned sponsors. These pins are camouflaged among the normal user-content pins, but they serve as potential ads.

Pinterest: Money-making strategy

Since its start in 2010, Pinterest had no revenue model till 2013. When in 2013, the platform introduced promoted pins. Basically, promoted pins is a new name for the promotion of advertisements. They seem identical to normal pins. However, they are not.

In actuality, promoted pins are advertisements in the form of pins on the user dashboard. The promoted pins can be searched through the search results and can be found in a number of places on Pinterest.

The basic idea is to promote the product of the identified sponsor, which redirects to the sponsor’s website or application.

Suited for Businesses, why?

In modern days, a number of businesses prefer investing much of their resources in marketing on Pinterest than on other social networking websites. Why is that so?

The main reason is the self-creation of a marketing niche on the platform.

Pinterest has millions of users who form pinboards which are accessible by other millions of users. Now, when content is present in the form of clusters, it is easier for different marketers to showcase their content and engage maximum audience response as compared to the scarce placing of advertisements in other social networking platforms.

According to a recent survey, almost 96% of users in the past 6 months reported that they use Pinterest to research and gather information. Another 93% reported that they use Pinterest to plan for purchases.

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Business Models

Tinder and its Business Model – How does it work?

Tinder, the world’s number 1 dating application, has one of the easiest application layouts. For all the online dating beginners, the steps are: Swipe, get matched, flirt and date. This simple yet effective business model of tinder has helped it climb the stairs of startup-greatness. However, how does it really generate revenue? Let’s find out.

Business Model – Tinder

The socially awkward situations of communication and interaction with other humans have been a turn off for many people. There is a huge amount of people who avoid risking their comfort zone to approach the opposite gender.

By targeting this extremely minuscule yet integral loophole, the creators of Tinder developed the application in 2012. Currently, Tinder is owned by InterActiveCorp (IAC). IAC is an American Internet and media company who owns a number of other famous initiatives such as about.com, ask.com, Vimeo, dictionary.com etc.

What is different in Tinder?

As mentioned earlier, Tinder exploits the human reluctance to interact with people. In this way, it creates a virtual backdoor for introverts. It allows them to communicate with strangers, which is a no-no for many people.

Back in 2013-14, this new approach proved fruitful for the company as they saw a flock of users approaching them. In 2014, Tinder won the TechCrunch’s Crunchie Award for Best New Startup of 2013.

Tinder – Let’s understand the mechanism

Tinder is a location-based application that helps a user find interested people in the surroundings. The application uses the user’s Facebook account to extract the best possible results for the user. Upon matching, the users are able to chat and carry their dating mission, on.

Profiles

Tinder provides a discreet option to effectively maintain a user profile which is connected with our Facebook. It contains users’ information such as Profile pictures, users’ interests, hobbies, and other consensual user information.

tinder

Location

Considering Tinder is a location-based social application, it manages and updates people’s data to display to other users.

Tinder – Swipe

Tinder’s entire dating mechanism is based on this singular feature. The user is given two options to choose from. Upon swiping left, you can reject/dislike a profile and upon swiping right you an accept/like a profile.

Now the tricky part starts after the right swipe. If a user swipes right to a profile but that does not happen vice versa, the user won’t be able to communicate with that person. However, right swipes from both the initiate the dating.

tinder

It’s a Match!

tinder

As mentioned earlier, when both parties swipe right, Tinder displays a good new. It’s a Match!

Upon the arrival of this message, the users get the option of either to continue swiping to increase options, or to send a message.

What’s a Super Like?

Super Like came in 2015, which is probably the most effective of all features. Whenever a user swipes right, it shows that the user has an interest in that particular profile. However, when a user super likes a profile, that raises the stakes up a bit. Super likes are not as frequent as normal right swipes.

As a result, super likes are still in possession of their integrity and importance.

According to statistical analysis, conversations that start with a Super Like last 70% longer than normal conversations.

Tinder’s remunerative business strategy

Tinder Plus

Initially, Tinder came out as a free dating application in 2013. However, as most applications first conquer their market and then talk money, Tinder did that too. After creating the needs among its customers, the company divided its application into two major categories: Tinder Basic and Tinder Plus.

The Tinder Plus, with the disadvantage of being a paid application, brought multiple features to attract its customers. Such as unlimited swipes, change of location, etc.

The special features include:

  • Unlimited Swipes;
  • Passport (find a match anywhere);
  • 1 Boost per month;
  • More than 1 Super Like each day;
  • Rewind Feature;
  • Cross-matching of a basic application user and a plus application user.

As far as the cost of Tinder Plus is concerned, the prices vary from $9.99 to $19.99 in the US.

Tinder Gold

Provided you have a lucrative business strategy and a creative marketing plan, you can do wonders in the tech industry. After carefully studying its audience, Tinder realized that it can provide a number of features that will be supported by its growing audience.

Humans, although are the most educated species on earth, they are still easy to be exploited and manipulated. Tinder knows that its users have the tendency to grow anxious about who and how many people like them. It cashed this loophole.

With Tinder Gold, it introduced the feature of Likes You. It is a premium feature that lets you know who likes you and what is your like count. Using this, the user saves ample amounts of time in the tedious swiping and has an option to choose from the people who have already liked them.

Cool, right? Well, that’s how you market your strengths.

The cost of Tinder Gold varies for different ages and geographical locations. It is priced between $14.99 to $82.99.

Sponsored Profiles

There is one thing to let companies market their ads on your application. And then there is a thing bombarding advertisements. The latter gets annoying for the customer, pretty easily. Tinder, just like Snapchat, has integrated sponsored profiles in a subtle and eloquent way that doesn’t irritate its customers.

Furthermore, with the effective use of chatbots by companies, users can interact with them by simply swiping right to their profiles.

Boost

As the name suggests, the Boost feature provides a boost to the chosen profile. It moves the user’s profile to the top in the area for 30 minutes. This boost comes in the form of statistics. It shows that a boosted profile is likely to get 10X more views than a normal profile. Furthermore, it also provides a probable boost of up to 3x more matches. This feature is a standalone feature which is available at a price range of $1.99 to $3.99. It is a pre-added feature in Tinder Plus.

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Business Models

What is the Revenue Model of WhatsApp? How Does it Make Money?

Whatsapp initially started as a status update application in 2009, hence the name “Whatsapp” was coined. The founders of the IM Application, Brian Acton and Jan Koum were ex-Yahoo employees. They had figured the rising communicational needs in society and wanted to produce such an application that would help people stay connected.

The Facebook-owned IM Application converted into a messaging application when Whatsapp 2.0 came out, which resulted in an approximate figurative increase of 250,000 users.

Considering the number of smartphone users in 2009, this was a significant increment in terms of business strategies. However, after their initial goal to attract the audience came the important part of how to generate revenue from their application.

At first, to cover the costs of sending verification texts to the users’ smartphones, they introduced a yearly-subscription fee. However, in 2016, the company announced that the application is now completely for its users and also reclaimed their stance on advertisements.

Then how exactly does the leading cross-platform IM Application generate revenue? Whatsapp’s business model has been a mystery.

Whatsapp remunerative strategy

The founders of Whatsapp were strictly against the idea of bombarding their users. Their motive of the application was to provide the users with an easy-to-use interface and keep improving the user experience. Since the founders’ idea was in the interests of the users, most of them complimented the company’s plan in unusual ways:

Whatsapp

Both Acton and Koum were aware of the consequences of advertising, how intelligently do the big companies convert users from being a user to a product himself. However, in order to extract the maintenance costs of the application, they initiated a $1 annual-subscription fee which was encouraged and appreciated by their users.

Whatsapp’s Revenue Generation Strategy

When Brian Acton and Jan Koum started the application, the scope of the application was only limited to allowing users to update their statuses and let me know what they were up to.

However, with the release of Whatsapp 2.0 and the addition of a messaging component changed the dynamics of the application. Upon noticing the potential of his initiative, Acton persuaded five ex-Yahoo employees for a seed fund of approximately $250,000. This resulted in the launch of the application in November 2009.

Since the application had bags of potential to succeed, the initial funding was a stepping stone. The second round of funding came from Sequoia Capital who initially invested $8 million for 15% of the company in April 2011. After monitoring the growth of the application, they invested another $52 million in February 2013 to help Whatsapp’s value jump up to $1.5 billion.

It was due to these substantial investments that Whatsapp decided to drop the annual subscription fee. The investments were enough to serve as the source of income of the 50 staff members of Whatsapp plus the maintenance cost of the application.

The founders adopted a unique strategy of building a network first and then generating money from it. Initially, they filled the users’ needs to have a responsive cross-platform chat application. Later on, they transformed into a replacement of the term instant-messaging application.

Due to their soaring rise, the company was acknowledged by Facebook’s CEO Mark Zuckerberg. He acquired the IM Application in 2014 for $19 billion. This also included the inclusion of Jan Koum on Facebook’s board.

Whatsapp’s Revenue Model

After acquiring Whatsapp in 2014 for $19 billion, Facebook had other plans to generate revenue from the chat-application. Facebook actively used Whatsapp as a user data generation factory to inquire about the users.

Whatsapp Business

Facebook introduced a new business-centered application named as Whatsapp Business. The application allows different businesses to become a verified business on Whatsapp.

Furthermore, it allows premium features such as automatic responses to the customers. Facebook also released the Whatsapp Business API. It can be integrated into different websites to be directed to the corresponding verified Whatsapp Business account.

Whatsapp Business API

While Whatsapp’s Business application is free to use, Whatsapp makes money from its Business API. The API allows you to send shipping confirmations, customized appointment reminders.

However, this could serve as a spamming tool, right? No. Whatsapp caters this problem effectively. The Business API does not allow you to send a message. This way, you can only reply to a user message hence limiting spamming to a great degree.

Whatsapp
Whatsapp Business provides the facility of Shipping confirmation

But, how does the Business API really generate money? Whatsapp’s Business API charges the businesses for slow replies. According to the API, the businesses can respond to user messages for free in 24 hours. But, they will have to pay for every message sent after 24 hours.

WhatsApp Payments

Recently, Whatsapp introduced a payments option in the Indian version of their Application. This will help the verified businesses on Whatsapp Business application manage their transactions without involving a third-party.

Future Strategies

Whatsapp has some exciting new strategies up its sleeves to attract more revenue. Recently, the application copied Snapchat’s premium Story feature to divert Snapchat’s audience towards their application. According to the Economic Times, the application is planning to allow businesses to promote their products using the Whatsapp Stories feature.