Apple has struck a deal with social media giant Pinterest.
Last month, Pinterest unveiled App Pins -- a new tool that allows its users to pin links to individual iOS apps on Pinterest boards. Like recipes, crafting projects, and apparel, Pinterest could eventually become an influential player in the app discovery process.
Continue Reading Below
If it does, it could pose a great challenge to Facebook .
Pin that appPinterest's new tool is a two-way process: Users can both pin individual iOS apps to various boards (say, an activity tracking app to a workout board) and download iOS apps directly from pins they may come across. In either case, the process requires the use of an iOS device (iPhone, iPod Touch, or iPad), but that seems likely a relatively modest hurdle (who, other than iOS users, would be interested in an iOS app?).
Pinterest has a board dedicated to apps selected by its staff members, a sort of editor's choice list. Apple maintains a collection of similar boards, highlighting iOS apps across a variety of different interests. These, however, are relatively meaningless: The power of this tool will be felt when users, and to a greater extent, advertisers, take advantage of it.
Apple's app store is undoubtedly brilliant, but its curation is highly lacking. With hundreds of thousands of apps, it's difficult for users to find particular apps that may interest them. Apple's deal with Pinterest is a major step in the right direction: Users browsing Pinterest may come across apps that correspond to their interests (traveling, working out, cooking, and so forth) and choose to download them.
Initially, these are likely to be apps curated by those they follow -- an easy way to get friendly recommendations. But over time, as Pinterest rolls out its "Promoted Pins" initiative, they could come from the app creators themselves -- Pinterest could become a valuable tool in app advertising.
Facebook's reliance on mobile appsIf so, it will pose a major challenge to Facebook, whose business is at least partially reliant on ads for app installations.
Much of Facebook's recent share price appreciation has come on the back of its surging mobile revenue. Last quarter, 69% of Facebook's advertising revenue came from mobile -- up from 53% in the prior year. Some percentage of this revenue is coming from ads for app installations -- ads that encourage users to download particular apps, like Candy Crush Saga or Clash of Clans.
Some, including Snapchat's CEO Evan Spiegel, have argued that Facebook is susceptible to the bursting of a technology bubble, as its mobile advertising stream is likely to dry up when the many venture-backed companies paying for these app ads run out of cash. Facebook's management has responded, arguing that its mobile ads are "very broad based," but has declined to break out the exact percentage of its mobile ads coming from app installations.
Pinterest could be a threat to FacebookAlthough Pinterest serves a different market than Facebook and offers a very different experience, it could still pose a challenge to the social networking giant in the months ahead. Not from the user's perspective -- no one is leaving Facebook for Pinterest (or vice versa) -- but from the advertiser's.
Pinterest's forays into advertising and apps installations are both in their infancy -- its deal with Apple is just a few weeks old; its promoted pins initiative hasn't even launched. But it's still something Facebook shareholders should keep a close eye on.
The article Apple's New Deal With Pinterest Could Be a Major Threat to Facebook originally appeared on Fool.com.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Facebook. The Motley Fool owns shares of Apple and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.