Revenue for the big players in social media has been growing fast as advertisers shift their dollars away from traditional media. Facebook's (NASDAQ:FB) revenue grew by some 40% last quarter. LinkedIn's grew by a similar 37%. And Twitter, despite its struggles, grew revenue by 58% over the prior year.
But growth at all three of those companies pales in comparison to that of another popular social site. According to a set of reportedly leaked documents obtained by TechCrunch, Pinterest expects its revenue to increase from less than $25 million in 2014 to $169 million this year -- a massive 576% year-over-year growth rate. Growth is expected to continue at a blistering pace from there, as well.
Pinterest looks like a rising star, poised to start taking a progressively larger share of the digital ad market. But the company it's most likely to steal share from isn't in my list above. Nor is it any social player, for that matter.
4C Insights reported last month that clients' ad spending on Pinterest had grown by 7.7 times since January. Pinterest bills itself as "the visual bookmarking tool that helps you discover and save creative ideas." It was founded in 2010 and the site in September said it had 100 million monthly active users, aka Pinners. The company points out that people use the site to do things such as plan their vacations, redo their kitchens, and find healthy recipes.
Aaron Goldman, 4C's chief marketing officer, offered a rather glowing report to AdWeek's SocialTimes last month, calling Pinterest the "perfect social discovery engine." "You've got consumers in buy-mode actively seeking inspiration with built-in sharing and network effects. Best of all, it's still early days for Pinterest ads so there's not a ton of competition and inventory is quite a bargain."
Courting consumers already in "buy-mode," conducting searches? Until now, that description largely fit just one company that does not also maintain its own retail website: Alphabet's Google.
And that's why Pinterest's anticipated growth could come primarily at the expense of the traditional search giant.
Searching for mobile growth
The mobile search ad market is expected to more than triple from its $8.7 billion in 2014, growing to more than $28 billion by 2019, according to eMarketer, and Pinterest is positioning itself to start grabbing a bigger share of that pie.
Pinterest last month updated its website and mobile app to give people new ways to search. Rather than simply use keywords, Pinterest users will now be able to search using images. If a user spots something in a picture that draws her interest, like an article of clothing or piece of furniture, she can click or tap that item in the image and be taken to similar search results.
This fits neatly into a monetization strategy for Pinterest, because it allows the company the opportunity to serve up those search results much the same way Alphabet's Google has been doing with keyword searches for years.
This builds upon prior moves by Pinterest. Earlier this year, the company unveiled "Buyable Pins," which allow users to shop for items and buy directly through the site. Earlier this fall, it refined its search function to deliver more relevant results based on a person's location.
Taking on a giant
But the move to create visual search may be the most important yet. The company billed the feature in its blog as a "crazy-fun new visual search tool." But while this may be fun for some users, it's really more about laying the groundwork for an important advertising revenue stream for the company.
It has the chance to fundamentally change the way its users search for products -- a potentially significant disruption to Google's bread and butter since its earliest days. But how large a bite Pinterest can take out of Google's business remains to be seen.
In terms of revenue, Pinterest remains relatively tiny compared to its well-known contemporaries. If the leaked numbers are accurate, the $25 million it generated in 2014 was just 1/500th the $12.5 billion pulled in by social leader Facebook. And even if it grows at the astounding pace cited, its $169 million in 2015 is likely to weigh in at around 8% of the $2.2 billion in revenue that Twitter is expected to generate in 2015.
But Pinterest has built a significant user base that remains largely untapped, setting the stage for fast revenue growth. Its user base broke the 100-million mark in active monthly users earlier this year, meaning it has at least a quarter of the users that Twitter can claim, and roughly 1/15th Facebook's massive monthly user base.
The Pinterest documents obtained by TechCrunch forecast annual revenue growth averaging more than 150%, hitting $2.8 billion in 2018. That would be even faster than the growth Facebook saw between 2007 and 2010, but slightly below what the leading social network saw between 2008 and 2011.
That wouldn't deal a devastating blow to Alphabet's Google -- which generated nearly $60 billion in revenue last year -- by any means. But it's another concern the search giant has as it fights to stay at the top of a fast-growing and quickly evolving digital ad market.
John-Erik Koslosky owns shares of GOOGL, FB, LNKD, and TWTR. The Motley Fool owns shares of and recommends GOOG, GOOGL, FB, LNKD, and TWTR. 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.