With its Promoted Pins now available to advertisers, Pinterest is working on improving what its ads can do, as you’d expect. The most important thing an online ad can do is target the right people, so those advertisers will be happy to know that this is one area of focus for the company.

Do you expect Pinterest’s ads to become a must-have part of your social media strategy? Share your thoughts in the comments.

According to a new report from Ad Age, Pinterest is about to offer more precision in its targeting, which will expand options beyond its 30 main categories, and into more niche territory. The example given in the report is that advertisers will now be able to target a specific sport like soccer, rather than just sports in general, as has been the case.

Pinterest certainly doesn’t know as much about its users as Facebook, but it can definitely get a pretty good grasp on personal interests, and even potential purchase intent. According to Forrester, Pinterest’s data has more potential to drive sales.

In addition to the narrower category targeting, the report says advertisers will also be able to target users by audience, such as “outdoor enthusiast.” It’s unclear how many such audience options will be available.

Ad Age says that in the coming months, Pinterest will also begin testing a new ad format for animated pins that move when users scroll. This follows recent reports of a new multi-pin ad format. DigiDay reported last week:

The scrapbooking site is developing a new ad, a “multi-pin carousel” that will allow marketers to place several images in a single promoted pin, according to ad agency executives briefed on the company’s plans. Although Pinterest is actively pitching the ad to agencies, it’s unclear when the ad will hit the market, the execs said.

It’s important to remember that advertising on Pinterest is in its infancy. It’s going to get much better. The new capabilities mentioned above are certainly a step in the right direction.

Forrester VP Nate Elliott wrote in January, “Marketers can’t tap into most of Pinterest’s fantastic user data. Although Pinterest’s paid ads (called Promoted Pins) came out of beta earlier this month, the offering lets marketers use just a few dozen interest-based targeting criteria. The result of such limited targeting is unclear ad performance: Pinterest can’t cite any success data for Promoted Pins aside from an increase in earned impressions.”

“The bottom line: Pinterest’s marketing value lies more in the future than in the present,” he added. “By 2016, Pinterest’s ad offering could trump that of other social sites — but today, most brands struggle to successfully use it as a marketing tool. We’re encouraging marketers to put limited resources into Pinterest right now. Once the site broadens its targeting capabilities, though, it’ll be time to spend.”

eMarketer, which projects that over a quarter of US social network users and 18.1% of internet users will use Pinterest on a monthly basis this year, suggests that Pinterest may end up competing more with Google and Amazon than social networks like Facebook and Twitter when it comes to ad dollars.

“Pinterest users are likely to be in a better frame of mind to receive advertising,” wrote Debra Aho Williamson, principal social media analyst at eMarketer.

That’s all the more reason the rumored Pinterest “buy” button could prove extremely effective. Ad Age notes that the company still wouldn’t confirm the button, by the way.

Pinterest has indeed placed a great deal of focus on its search feature of late. Last year, it launched Guided Search, which was a huge improvement in and of itself. As recently as January, it made a significant improvement being able to serve different results to men and women. The male demographic on Pinterest is growing, so this will only become more important for getting the right content in front of the right people.

Luckily for marketers, there’s a great deal of organic search potential to capitalize on here too. You should probably take a look at how ranking on Guided Search works.

Pinterest’s ability to get the right ads in front of the right people should be rapidly improving. Already in January, they started showing the ads in users’ home feeds. That same month, the company announced its acquisition of Kosei, which it’s using to accelerate its discovery and monetization efforts.

“Among Kosei’s accomplishments is building a graph that understands more than 400 million relationships between 30 million products,” a spokesperson for Pinterest told WebProNews. “Over the years we’ve been building a system for helping people discover the most relevant Pins, and the Kosei team is a great complement to our existing technology (see how we’ve been using machine learning here). The acquisition of Kosei will enable us to move faster in our efforts to provide relevant recommendations across the service, as well as in ad targeting and measurement as we roll out Promoted Pins.”

“Recommendations and ads systems are rapidly changing due to the confluence of mobile and personalization,” said Head of Pinterest partnerships Joanne Bradford. “The Kosei team and technology will help us accelerate our ad efforts by offering marketers more solutions to tap into our growing and valuable data set and object graph. This year we’ll provide the best ads canvas with the most actionable insights to reach an engaged and passionate brand-centric audience.”

A couple weeks ago, The Wall Street Journal reported that Pinterest is in talks to raise a new $500 million round of funding, valuing the company at $11 billion. In that report, it said:

According to Pinterest, early results show that users interact with these new ads—called promoted pins—just as much, if not more, than user-posted pins, a sign that users find the advertisements relevant to their overall experience.

As Pinterest gets the ball rolling on its own monetization efforts, it has completely shut out affiliate links, which has cost some Pinners making money of the service that way. Pinterest said the move is “not about monetization” and is “100% about the Pinner experience and ensuring relevant content on Pinterest.”

The company said in a statement, “We are removing affiliate links to ensure we’re providing the best possible experience for Pinners. Recently, we observed affiliate links and redirects causing irrelevant Pins in feeds, broken links and other spammy behavior. We believe this change will enable us to keep the high bar of relevancy and quality Pinners expect from Pinterest.”

Still, in its email to affected users, it suggested other ways to make money using Pinterest, including paid social media marketing, paid board curation, or paid content creation.

Is Pinterest already a significant part of your social media strategy? Do you expect to utilize it more in the future? Discuss in the comments.

Image via Pinterest