PayPal is rumored to be in advanced discussions to acquire Pinterest, the social media platform constructed around image sharing, at a price of $45BN. If the deal is consummated, it will be the highest-priced consumer internet acquisition of the last decade. Pinterest’s stock rose by more than 12% when news of the potential deal was reported. Update: PayPal clarified on Sunday, October 24th that it is no longer pursuing the deal.
PayPal’s acquisition of Pinterest would create a formidable Content Fortress: by combining PayPal’s payments platform with Pinterest’s advertising infrastructure, it could allow advertisers to bring about purchases for their products directly in the Pinterest app, which would give Pinterest first-party access to the data emitted by those transactions. This is a particular product, commerce, and advertising strategy that was catalyzed by Apple’s App Tracking Transparency (ATT) privacy policy, which prevents advertising platforms from collecting conversion data that originates outside of their first-party environments.
In Content Fortresses and the new privacy landscape, I defined a Content Fortress as:
Any platform or portfolio of products supported by a rich advertising ecosystem serving owned and operated inventory using only first-party data.
Ultimately, a Content Fortress fits into the post-ATT reality by subsuming third-party content interactions into a first-party setting. Note that a Content Fortress is different from a Walled Garden: a Walled Garden engages users with (often user-generated) content and monetizes that engagement by allowing advertisers to purchase ad impressions that lead the user to an external destination. The most sophisticated of these platforms then monitor the conversions that take place subsequent to ad clicks on their platforms and use that data to optimize ad campaigns on that basis.
But this dynamic ended with ATT, at least on iOS. ATT prevents user-level data transfer between an ad platform and an advertiser’s property: ad platforms aren’t allowed to observe the actions that users take following an ad click, except as is reported at the campaign level through Apple-supplied frameworks like SKAdNetwork (for mobile app advertising campaigns) and Private Click Measurement (for mobile web advertising campaigns).
A Content Fortress sidesteps this restriction by bringing the third-party content that previously existed independently onto the advertising platform as a native experience. The canonical example of this is FB Shops, which allows retailers to sell their products directly within the Facebook and Instagram apps. When transactions take place within Facebook’s apps, the data artifacts created as a result are first-party to Facebook and are thus able to be used to target ads in a way that is compliant with ATT.
The purpose of a Walled Garden is to sell owned-and-operated ad inventory that directs users to non-owned destinations. The purpose of a Content Fortress is to sell owned-and-operated ad inventory that directs users to content hosted by the Content Fortress — either content that it owns itself (as in the case that I lay out for Zynga in this article) or third-party content that it has subsumed onto its platform. Walled Gardens get paid when users click ads and leave; Content Fortresses get paid when users click ads and remain.
Since ATT was rolled out, a number of social media platforms have begun to transition into Content Fortresses by subsuming the content interactions that they previously facilitated off-platform through selling advertising. Among these:
- TikTok introducing TikTok Shopping in the US, UK, and Canada. TikTok Shopping is a native ecommerce experience similar to FB Shops;
- Twitter launching Twitter Shopping;
- TikTok introducing Jumps, which are lightweight content experiences (“mini-programs”) created by third parties that load directly within the TikTok app. Jumps are meant to mimic the functionality of stand-alone apps as a means of promoting them.
Pinterest introduced the “Shop from Pin” feature in 2020, which gives retailers the ability to include shopping ads for specific, relevant products directly into Pinterest search content and feeds. But these ads currently lead to retailer websites, where transactions take place outside of Pinterests’ purview. PayPal’s ownership would provide the shopping experience on Pinterest with a proprietary payments processor, allowing the app to integrate transactions natively, creating conversion data in the first-party environment that can be fully utilized for ads targeting.
The combined company would serve as an impressive Content Fortress given how seamlessly ecommerce ads fit into Pinterest’s retail-centric content context. And this integrated platform delivers value through better advertising targeting in the ATT environment as well as the superior economics of facilitating the retail transaction in addition to the advertising for it.
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