Pinterest Jumps Into Video-Ads Fray

Pinterest Inc. is forging into video advertising, a potentially lucrative business that also is rife with competition from rival social-media players.

The image-discovery service said it would begin displaying promoted videos, allowing marketers to pitch their wares in video spots that can run as long as five minutes. The beta version will be available Wednesday, the company said.

Pinterest will present the ads differently than on Facebook and Twitter, where the ads automatically start playing without sound as users encounter them within their news feeds. On Pinterest, the video ads that appear as previews in a user's feed would play as quickly or slowly as the page is scrolled, stopping when the scrolling stops.

Clicking on a video would produce a new page where the ad would play with sound. Underneath the video, marketers could place as many as six "featured pins" that could highlight specific products related to the video, like an appetizer accompanying a featured dinner recipe.

Pinterest is the latest web company to aggressively chase digital-video ad dollars, battling more established peers like Alphabet Inc.'s YouTube, Facebook Inc. and Twitter Inc., and fresher faces like Snapchat Inc.

As more consumers cut the cord, marketers and their massive TV budgets are following them to smaller screens. Advertisers are projected to spend $12.82 billion on digital-video ads in 2018, up from $7.7 billion last year, according to research firm L2.

"I think there's plenty of room for all of us to play, and everybody's got their strengths," said Jon Kaplan, Pinterest's head of global sales.

Pinterest believes its strength lies in user intent. People go to the site to discover new ideas on topics such as fashion, home dé cor and weddings by browsing through millions of images, or "pins." Pinterest shows those users advertisements that coincide with images that show up in their home feed.

Because many people use Pinterest to research specific projects like making dinner or decorating a nursery, the site can more easily predict their interests or catch a person in the mood to buy something, such as the lipstick featured in a how-to style video.

Pinterest has already tested the video-ad product with 12 partners that include Universal Pictures, General Mills's Old El Paso and L'Oreal's Garnier haircare brand.

Old El Paso tested a 30-second recipe video on how to make mini churro taco boats—a cinnamon churro crust filled with yogurt and fruit. "This is just one video so we can only draw so much from it, but we were excited to see that people were engaging and spending time with the pin differentially," said Michelle La Berge, senior marketing manager at Old El Paso.

The number of people who watched the video to the end exceeded the company's expectations, Ms. La Berge said, but she declined to disclose the specific video-viewing completion rate. She also declined to say whether the brand would buy video ads on Pinterest in the future.

Pinterest has been ramping up its ad business over the past few years in a bid to justify the $11 billion valuation investors assigned it in 2015. Last year, the company generated roughly $100 million in revenue, a person familiar with the matter has said. In March, Pinterest hired Mr. Kaplan, a 12-year Google Inc. veteran where he worked on ad sales at YouTube, to bolster its ad offerings.

U.S. and U.K. businesses that already work with Pinterest will initially have access to the promoted video. The ad would typically appear in the fourth slot in the user's home feed as well as when users are scrolling through category feeds.

Write to Yoree Koh at [e-mail]

(END) Dow Jones Newswires

August 17, 2016 08:05 ET (12:05 GMT)

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