Six Easy Metrics to Measure an Influence Marketing Campaign

Measurement is one of social media’s key advantages over traditional marketing and advertising.

Prior to social media’s rise as an essential business solution, marketing campaigns were primarily through print, media including TV and radio, and direct mail. The use of flyers, posters, billboards and print editorials were the staple method of promotion, often complemented with radio spots or television ads.

The main problem with these methods is that it was difficult to pinpoint which ones were working and driving foot traffic to a brick and mortar store.

  • If a business sent 10,000 flyers out, how could they guarantee their intended recipients saw all 10,000?
  • Or if a radio spot played during a certain time of day based on that radio station’s demographics, how could the brand be sure a certain percentage of that audience heard and acted on that ad?

The answer to both questions is simple – they couldn’t. If there was increased foot traffic to a location or more calls to a call center for a company’s information pack, more often than not the source of that referral was virtually impossible to identify.

Social media changed that.

The ability to create extremely targeted campaigns, combined with platforms that measure which networks and content create the most return on investment, has made social media a key part of every smart business owner’s toolset.

This ability to measure business results is easily transferrable to measuring influencer results – the difference is in what, and who, you measure.

Measuring the Brand Metric

There are two core metrics that brands need to measure in any influence marketing campaign. The first is the Brand Metric.

Investment

The investment metric is the pre-campaign cost of researching which influencers are right for you by identifying Micro and Macro Influencers; how much it costs to set the program up; and using that as a barometer against how much return (financial or awareness) you experienced.

Resources

The financial investment of an influencer campaign involves more than pure monetary costs. Resources like manpower (how many employees are needed and how many hours they need to allocate to the campaign) and education (how much time you need to allocate to train each influencer on your product and company culture) also need to be measured and added to the bigger financial investment.

Product

To encourage an influencer’s audience to connect with your brand from a lead generation or purchase decision angle, free samples of your product need to be made available to the audience as well as the influencer. Test or demo areas may also need to be set up for more technical-led products or software.

The cost to your company for the amount of products sent out, coupled with the hosting costs of the demo area online, need to be factored into the overall financial investment of the campaign.

Measuring the Influencer Metric

In addition to measuring the Brand Metric, the second key metric to track is the Influencer Metric, which can be broken down into three key areas.

Ratio

The biggest problem many brands have when it comes to results from social scoring platforms is the “influencer” targeted is simply another number in a database with a large following and an amplified voice online. This lack of differentiation is guaranteed to provide poor returns.

Purchase life cycle paths

Instead, the ratio of community to followers is key – a thriving, interactive community that reacts to an influencer is far more important than higher follower numbers. It’s these qualitative reactions that provide a higher propensity of actions taken by the influencer’s community.

Measure how many reactions an influencer is receiving when sharing your message as a percentage of their overall following to extract a more exact return on that specific influencer.

Sentiment

Every marketing campaign, whether online or offline, succeeds primarily for one main reason – the perception of that campaign and the buy-in of the audience.

Using the same metrics to measure your influencer campaign will allow you to understand the sentiment around the brand message, and how the target audience perceives both your brand and the campaign itself. It also allows you to quickly identify areas that upset a certain demographic and amend the message accordingly, or instigate a crisis communication response if needed.

Additionally, you can see which influencer receives a favorable reaction and adoption, allowing you to increase awareness around him or her and helping improve the perception of a less well-received influencer.

Effect

The most valuable barometer to showing whether an influencer campaign has worked or not is the effect it has on your brand.

From a brand awareness point of view, measurement needs to include:

  • traffic generated to a website, microsite or landing page;
  • how many times your brand or product is mentioned online and how many people recognize your name when mentioned;
  • how many new fans or followers you accrue on the social networks your brand is on;
  • how many white papers or fact sheets were downloaded from your website;
  • and how many new subscribers you receive to your company blog or newsletter.

From a more dedicated business angle, it’s much more straightforward:

  • how many new inquiries did your inbound sales team receive;
  • how many referrals did your direct sales team receive;
  • and how many sales were directly attributed to your influencer’s work with their community.

Depending on your product or service, the purchase cycle of your customer may be a longer one than the duration of your campaign – include a plan to continue measuring the effect of the initial influence campaign on this purchase path.

Customer influence and advocacyMoving Beyond the Metrics

While by no means exhaustive, both the Brand Metric and the Influencer Metric measurement examples are key parts of any kind of influencer campaign your brand partakes in. Each metric is a guideline to the core information that needs to be tracked in each example – your own brand’s definition of additional metrics will be determined by the results you’re looking to achieve.

You may only be interested in awareness, in which case you’d place more emphasis on what platforms will show most return; what new platforms you can take advantage of; where your competitors are interacting online and how you can insert your brand into these conversations via your influencers.

If you’re more geared towards pure sales and lead generation, your outreach and subsequent measurement needs to be focused more on potential ecommerce partnerships with peers and colleagues of your influence; affiliate sales programs for your influencer’s community; strategic partnerships with other businesses in your industry who can benefit from increased exposure through your influencer while introducing you to their audience.

Either way, determining the end goal allows you to chart a path back from there and identify the milestones and metrics that matter for each one. Get this part right, and your influence campaign will move from being a nice to have to becoming an essential part of the puzzle.

image: antony_mayfield

Six Easy Metrics to Measure an Influence Marketing Campaign

Measure

Measurement is one of social media’s key advantages over traditional marketing and advertising.

Prior to social media’s rise as an essential business solution, marketing campaigns were primarily through print, media including TV and radio, and direct mail. The use of flyers, posters, billboards and print editorials were the staple method of promotion, often complemented with radio spots or television ads.

The main problem with these methods is that it was difficult to pinpoint which ones were working and driving foot traffic to a brick and mortar store.

  • If a business sent 10,000 flyers out, how could they guarantee their intended recipients saw all 10,000?
  • Or if a radio spot played during a certain time of day based on that radio station’s demographics, how could the brand be sure a certain percentage of that audience heard and acted on that ad?

The answer to both questions is simple – they couldn’t. If there was increased foot traffic to a location or more calls to a call center for a company’s information pack, more often than not the source of that referral was virtually impossible to identify.

Social media changed that.

The ability to create extremely targeted campaigns, combined with platforms that measure which networks and content create the most return on investment, has made social media a key part of every smart business owner’s toolset.

This ability to measure business results is easily transferrable to measuring influencer results – the difference is in what, and who, you measure.

Measuring the Brand Metric

There are two core metrics that brands need to measure in any influence marketing campaign. The first is the Brand Metric.

Investment

The investment metric is the pre-campaign cost of researching which influencers are right for you by identifying Micro and Macro Influencers; how much it costs to set the program up; and using that as a barometer against how much return (financial or awareness) you experienced.

Resources

The financial investment of an influencer campaign involves more than pure monetary costs. Resources like manpower (how many employees are needed and how many hours they need to allocate to the campaign) and education (how much time you need to allocate to train each influencer on your product and company culture) also need to be measured and added to the bigger financial investment.

Product

To encourage an influencer’s audience to connect with your brand from a lead generation or purchase decision angle, free samples of your product need to be made available to the audience as well as the influencer. Test or demo areas may also need to be set up for more technical-led products or software.

The cost to your company for the amount of products sent out, coupled with the hosting costs of the demo area online, need to be factored into the overall financial investment of the campaign.

Measuring the Influencer Metric

In addition to measuring the Brand Metric, the second key metric to track is the Influencer Metric, which can be broken down into three key areas.

Ratio

The biggest problem many brands have when it comes to results from social scoring platforms is the “influencer” targeted is simply another number in a database with a large following and an amplified voice online. This lack of differentiation is guaranteed to provide poor returns.

Purchase life cycle paths

Instead, the ratio of community to followers is key – a thriving, interactive community that reacts to an influencer is far more important than higher follower numbers. It’s these qualitative reactions that provide a higher propensity of actions taken by the influencer’s community.

Measure how many reactions an influencer is receiving when sharing your message as a percentage of their overall following to extract a more exact return on that specific influencer.

Sentiment

Every marketing campaign, whether online or offline, succeeds primarily for one main reason – the perception of that campaign and the buy-in of the audience.

Using the same metrics to measure your influencer campaign will allow you to understand the sentiment around the brand message, and how the target audience perceives both your brand and the campaign itself. It also allows you to quickly identify areas that upset a certain demographic and amend the message accordingly, or instigate a crisis communication response if needed.

Additionally, you can see which influencer receives a favorable reaction and adoption, allowing you to increase awareness around him or her and helping improve the perception of a less well-received influencer.

Effect

The most valuable barometer to showing whether an influencer campaign has worked or not is the effect it has on your brand.

From a brand awareness point of view, measurement needs to include:

  • traffic generated to a website, microsite or landing page;
  • how many times your brand or product is mentioned online and how many people recognize your name when mentioned;
  • how many new fans or followers you accrue on the social networks your brand is on;
  • how many white papers or fact sheets were downloaded from your website;
  • and how many new subscribers you receive to your company blog or newsletter.

From a more dedicated business angle, it’s much more straightforward:

  • how many new inquiries did your inbound sales team receive;
  • how many referrals did your direct sales team receive;
  • and how many sales were directly attributed to your influencer’s work with their community.

Depending on your product or service, the purchase cycle of your customer may be a longer one than the duration of your campaign – include a plan to continue measuring the effect of the initial influence campaign on this purchase path.

Moving Beyond the Metrics

While by no means exhaustive, both the Brand Metric and the Influencer Metric measurement examples are key parts of any kind of influencer campaign your brand partakes in. Each metric is a guideline to the core information that needs to be tracked in each example – your own brand’s definition of additional metrics will be determined by the results you’re looking to achieve.

You may only be interested in awareness, in which case you’d place more emphasis on what platforms will show most return; what new platforms you can take advantage of; where your competitors are interacting online and how you can insert your brand into these conversations via your influencers.

If you’re more geared towards pure sales and lead generation, your outreach and subsequent measurement needs to be focused more on potential ecommerce partnerships with peers and colleagues of your influence; affiliate sales programs for your influencer’s community; strategic partnerships with other businesses in your industry who can benefit from increased exposure through your influencer while introducing you to their audience.

Either way, determining the end goal allows you to chart a path back from there and identify the milestones and metrics that matter for each one. Get this part right, and your influence campaign will move from being a nice to have to becoming an essential part of the puzzle.

image: antony_mayfield

Stop Scoring Influence, Start Creating Influence Paths

A few months ago, I sat down with Steven Sefton, Digital and Social Media Director for Zap Designs, to discuss a variety of topics including the differences in cultural marketing based on location; the changing face of influence; where influence marketing is heading; and much, much more.

Although Klout seems to be no more, social scoring is clearly still a driving tactic by brands when it comes to influence, given the news that LinkedIn has created its own scoring solution – which makes revisiting this interview kind of timely.

Below, you can find part two of that chat (which originally appeared on The Social Penguin), centred around influence marketing, the need to move away from generic social scores, and how brands are focusing on the wrong “influencer”.

I hope you enjoy, and you can find the first part of the interview here.

————————–

You’ve written the book Influence Marketing with Sam Fiorella. What made you write this book?

It was a mix of being disappointed at what was classed as influence today – social scoring platforms like Klout – and the realization that businesses would continue to get poor results from that kind of “influence marketing”. The focus was on the wrong people – it’s not influencers that make your brand successful, it’s customers.

We wanted to take back influence, if you like, from non-descript social scoring algorithms, and place the focus back squarely on the customer.

Understand where they are in the purchase life cycle, and who impacts their decisions at that point. Understand that, and you know who you truly need to connect with and how that person can help sway your customer’s thinking, and move them along the purchase path to the next phase, whether that’s Awareness, Research, Intent to Buy or something else.

How do you see influence marketing changing in the future?

Moving past scoring platforms and truly understanding what your customer needs, and working back from there to find who influences them and how. We’re tired of empty metrics likes impressions and social shares – we need to see real deliverables from our investments.

This is why scoring platforms fall down when it comes to real influence – they lack the data and connections that show the real context behind a relationship. The likes of Klout are selling social impressions, nothing more.

Do you think it’s going to become harder or easier to find relevant influencers?

If brands are willing to put in the legwork and avoid the quick-hit buzz-driven approach to influence, it does actually become easier. Instead of generic, scoredriven “influencers”, you’re identifying those that truly impact your customer’s decision-making process, no matter where they are in the purchase life cycle.

True influence

This works at every level – the brand isn’t paying for non-targeted campaigns, and has a far higher rate of success, and the customer is being helped at the exact point they need that help to make their decision. It’s not rocket science to run successful influence marketing campaigns; it’s just that some folks and technology vendors would have you think it is.

Can you be an influencer in many areas or will it come down to the super niches?

That’s the beauty of bypassing today’s “social scoring as influence” model, and really understanding what influence is and how to identify who really is influential. Klout goes for the topic approach – but that’s too generic, because human beings are way too complex to be tied to just a few topics.

Mindsets change based on peer pressure – does a guy start to try and like Justin Bieber to influence how a girl he’s interested in looks at him? That’s a simplistic example, but a valid one about the problems facing influence today.

Because real influence is based on who and what sways decisions at a given time in a person’s life, we are all influential in multiple areas. I’m not a “daddy blogger”, but I have two kids under four years old, a boy and a girl.

My experience in this area would mean I may be able to offer insights into what it takes to raise two toddlers, but I’d never be picked up by scoring platforms because I’m viewed as a marketer, or whatever.

THAT, for me, is where influence is going and needs to be – our topics and level of knowledge around these topics change all the time. So, because of that, niches aren’t needed – understanding of where we are in life is, and offers the bigger return.

How can brands better adopt influence marketing as a tactic?

Simple – buy our book!! Failing that…

Our studies, and discussions with both brands and organizations, show that they’re still in the mindset that scoring is the best way to run influence marketing campaigns, promotions, call it what you will. While they can offer a decent starting point, you need to go deeper than the data they offer to really start to understand true influence.

Additionally, brands are still seeing influence marketing as a buzz creator, and using it with the mindset of short-term campaigns. Influence offers so much more than this, and should really be used to move towards advocacy and longterm relationship building.

By using the methodology outlined in the book, and really understanding who influences your customers the most, and how that maps back to your goals, it becomes less a hit-and-hope tactic and more a defined, results-driven strategy.

To steal a line from the book, brands need to stop scoring influence, and start creating influence paths.

Why the Klout Sale is Bad News for Social Scoring, But Great News for Influence Marketing

Klout - meh

In the last couple of days, it was announced that social customer experience company Lithium Technologies would be acquiring social scoring platform Klout for a figure reputed to be around $100 million.

If the deal goes through, it’ll be the close of a five year journey for Klout since its inception – a journey that saw it initially praised as a conduit to determine online influence, and then berated for various missteps that included profiling minors, privacy concerns, and questions around its algorithm and whether it measured influence or simply social signals.

On first look, $100 million looks a great number for Klout, and validation of seeing through the criticism that’s plagued the service, especially in the last 12 months or so.

However, far from being a success story, the sale of Klout highlights its failings, and in more areas than simply the evaluation.

$100 Million Ain’t a Whole Can of Beans

For any start-up looking to be acquired, $100 million probably looks an attractive figure on face value. However, given the financial history of Klout, it’s closer to a loss than a win.

Take a look at their investment history:

  • Initial seed funding in 2009;
  • $ 1.5 million Series A funding in April 2010;
  • $8.5 million Series B funding in January 2011;
  • $30 million Series C funding in January 2012.

Just by these “standard” investment rounds, Klout had received $40 million in funding by the start of 2012, which saw the company valued between $200 – $300 million just a couple of short years ago.

Add to that venture round funding in September 2012 by Microsoft (to utilize Klout’s services in their Bing search engine), along with further venture round funding by Draper Nexus Ventures in August 2013, and it’s safe to say that a large chunk of the $100 million price from Lithium will be eaten up by investors looking for return on their earlier capital.

When you take away the minimum numbers that need to go back to the investors, the number that’s left – $60 million – doesn’t add up to a success story for Klout.

On average, a company that’s received $40 million in funding is usually expected to be valued around the $400 – $500 million mark.

Look at Foursquare as an example – before their recent Series D investment round that brought in another $35 million, Foursquare had been valued at $600 million, with investment total of approximately $72 million.

Given that Klout’s investment of $40 million is just over half the Foursquare amount, it stands to reason you’d expect the overall valuation to stand at just over half of Foursquare’s $600 million – yet that isn’t the case, despite Klout claiming to have data on 500 million profiles, versus Foursquare’s 45 million users.

Yet it’s these physical numbers that highlight the low dollar numbers when it comes to Klout.

Physical Users Versus Fabricated Users

One of the biggest criticisms leveraged against Klout has been their method of forcing “users’ to opt-out of their service, versus opting in to be profiled. Klout’s method of operation was to create a profile of you on the Klout database, based on your public Twitter profile – but it didn’t matter whether you liked this or not, you had no choice in the matter.

When questioned on why they used opt-out versus opt-in, Klout’s response was their practice was no different from Google indexing websites via their platform. Except… people that wanted to be found on Google opted-in to be indexable. People that didn’t want to be found on Klout had to essentially log in to the Klout platform to delete a profile that had been created, that the person never wanted or agreed to in the first place.

While Klout would never admit to it, this opt-out practice was viewed by cynics as a way to buffer user numbers. It didn’t matter if people knew they had a Klout profile or not – all that mattered was Klout could sell their service to brands and advertisers as “500 million profiles”.

About Klout

Yet there’s a big difference between a profile and an active user. Whereas Foursquare’s 45 million users are active, and therefore valuable to marketers looking to understand shopping behaviours, etc, Klout’s profiles included bots, automated accounts, multiple accounts set up for news feeds only, etc.

You can have 500 million “users” to sell to a potential advertiser – but if only a limited percentage of these users are real people actively offering up useful data, then your service is immediately devalued.

A Lack of Future Strategy

Perhaps where Klout failed most, and in turn lost a lot of the previous evaluation of a few hundred million dollars, is failing to adapt their platform to not only the “influence” industry they in part created, but meeting user needs and reacting to an ever-changing, and more demanding, content-led space.

Klout’s raison d’etre has always been to determine how influential someone is online, and allocate them a score between 1 and 100 – the higher the score, the more influential the person. At least, in theory.

However, the problem with any generic scoring solution – no matter how technical you claim the algorithm to be – is that scores can be gamed, and they don’t reflect the bigger picture.

Even in the early days of Klout being seen as a darling of the nascent social influence space, its algorithms were pulled apart in spectacular fashion when Justin Bieber had a perfect score of 100, while President Obama – arguably the most powerful person in the world – had a score of 88, while the Dalai Lama scored at 90.

As a result of the criticism they received about this, Klout updated their algorithm to show more real-world influence as having a bigger impact. Yet they resolutely continued to use scoring as a measure of influence, despite the flaws that strategy continued to show and despite their peers moving away from the public scoring game.

This lack of innovation and fresh direction was highlighted even more when compared to products like Traackr, who came out with solutions like their Influencer Network Analysis.

Traackr Influencer Network Analysis

This allowed users of Traackr to not only see who was influential based on real metrics like Relevance and Resonance, but also who essentially influenced the influencers – an added depth of identification that really laser-targeted the people you wanted to connect with.

Or consider Appinions, who measure offline influence as well as online influence, to offer a full spectrum of data and insights. This includes identifying the originating source of something that’s impacted discussion across the web, and how offline news stories and journalists drive online conversation and actions.

When comparing Klout’s social scoring algorithm as a measure of influence against real influence platforms that drive the insights needed for business goals, it was always going to be an uphill battle for Klout to be taken seriously as an influence marketing platform.

And then there were the Perks.

The ROI of Reach and Noise

Touted as a way to connect brands to the army of influencers in Klout’s database, Klout Perks were introduced in 2010 and were seen as one of Klout’s business models to monetize their platform.

Advertisers and brands would pay Klout a premium, which would differ based on the target audience and size of the promotion, and Klout would offer that brand’s product as a freebie to people who qualified based on their Klout score.

The problem was, there was no real relevance or context to the Perks. All that would happen is Klout would identify a bunch of people they perceived as influential in the brand partner’s niche, and – by giving them freebies like car test drives and airline trips – the Klout influencers would share their experiences and drive sales for the brand.

Klout Perks

Except that never really happened – or at least, not in the numbers that the brands probably expected, given the investments and amount of influencers promoting the brand’s goods.

The reason was simple – Klout didn’t dig deep enough into the audience of the influencer. They didn’t know if the followers of an influencer were in the market for the product being promoted; they didn’t know if they had brand loyalty elsewhere; and they didn’t know how contextual the influencer truly was in the area of the promotion.

This meant that, essentially, the Klout influencer was simply promoting without any knowledge of where their audience was in the purchase life cycle – a key factor in successful influence marketing campaigns (and something Sam Fiorella and I talk about extensively in our Influence Marketing book).

When you look at the public case studies Klout shares about their Perks, very few talk about tangible financial ROI. There are lots of examples of social shares, blog posts, etc., which is great for brand awareness. But for actual ROI and sales? Little evidence of success.

For brands that are spending upwards of $25,000 and more on Klout Perks, you want to see returns for your investment. The occasional example of ROI success after at least 400 campaigns and 1 million Perks being claimed is not a number designed to inspire confidence when it comes to breaking down your latest fiscal year’s marketing budget.

Klout’s Failure is Good News for REAL Influence

As I mentioned at the start of this post, $100 million isn’t chump change. However, given the financial history of Klout investment-wise, its business model of Perks, and its uncertainty as to what exactly it wanted to be (a recent pivot to a content curation platform seems too little, too late), you have to wonder what Lithium saw in the platform.

Perhaps it’s to identify influential customers (since Lithium serves the social customer industry), so that their issues can be resolved before they become an online crisis. However, that path could be fraught with negative feedback if customers feel they’re being ignored in lieu of “influencer customers”.

Perhaps it’s access to the data that Klout has. While there’s no question some of the data is for inactive accounts, there’s still a lot of information available for Lithium to integrate into its own solutions.

However, that’s for a future discussion once Lithium’s plans become clear. What’s clear right now is that Klout’s failure is a victory for real influence marketing technologies and strategies.

Social scoring was always a popularity game, with little relevance attached to actual influence – swaying a customer’s purchase decision at exactly the moment they make it – and more weight on social signals and amplification.

Now, with the flag-bearer of social scoring acquiescing to what almost looks like a desperation sale, the companies that are truly pushing the influence conversation forward can do what they do best, and meet the needs of brands and marketers that are looking for more than social shares when it comes to an influencer campaign.

Social scoring is dead – long live influence.

image: Jamie Koroluk

This article originally appeared on DannyBrown.me.

Why The Lithium Deal Highlights Klout’s Failings, But Is Good News for Influence Marketing

In the last couple of days, it was announced that social customer experience company Lithium Technologies would be acquiring social scoring platform Klout for a figure reputed to be around $100 million.

If the deal goes through, it’ll be the close of a five year journey for Klout since its inception – a journey that saw it initially praised as a conduit to determine online influence, and then berated for various missteps that included profiling minors, privacy concerns, and questions around its algorithm and whether it measured influence or simply social signals.

On first look, $100 million looks a great number for Klout, and validation of seeing through the criticism that’s plagued the service, especially in the last 12 months or so.

However, far from being a success story, the sale of Klout highlights its failings, and in more areas than simply the evaluation.

$100 Million Ain’t a Whole Can of Beans

For any start-up looking to be acquired, $100 million probably looks an attractive figure on face value. However, given the financial history of Klout, it’s closer to a loss than a win.

Take a look at their investment history:

  • Initial seed funding in 2009;
  • $ 1.5 million Series A funding in April 2010;
  • $8.5 million Series B funding in January 2011;
  • $30 million Series C funding in January 2012.

Just by these “standard” investment rounds, Klout had received $40 million in funding by the start of 2012, which saw the company valued between $200 – $300 million just a couple of short years ago.

Add to that venture round funding in September 2012 by Microsoft (to utilize Klout’s services in their Bing search engine), along with further venture round funding by Draper Nexus Ventures in August 2013, and it’s safe to say that a large chunk of the $100 million price from Lithium will be eaten up by investors looking for return on their earlier capital.

When you take away the minimum numbers that need to go back to the investors, the number that’s left – $60 million – doesn’t add up to a success story for Klout.

On average, a company that’s received $40 million in funding is usually expected to be valued around the $400 – $500 million mark.

Look at Foursquare as an example – before their recent Series D investment round that brought in another $35 million, Foursquare had been valued at $600 million, with investment total of approximately $72 million.

Given that Klout’s investment of $40 million is just over half the Foursquare amount, it stands to reason you’d expect the overall valuation to stand at just over half of Foursquare’s $600 million – yet that isn’t the case, despite Klout claiming to have data on 500 million profiles, versus Foursquare’s 45 million users.

Yet it’s these physical numbers that highlight the low dollar numbers when it comes to Klout.

Physical Users Versus Fabricated Users

One of the biggest criticisms leveraged against Klout has been their method of forcing “users’ to opt-out of their service, versus opting in to be profiled. Klout’s method of operation was to create a profile of you on the Klout database, based on your public Twitter profile – but it didn’t matter whether you liked this or not, you had no choice in the matter.

When questioned on why they used opt-out versus opt-in, Klout’s response was their practice was no different from Google indexing websites via their platform. Except… people that wanted to be found on Google opted-in to be indexable. People that didn’t want to be found on Klout had to essentially log in to the Klout platform to delete a profile that had been created, that the person never wanted or agreed to in the first place.

While Klout would never admit to it, this opt-out practice was viewed by cynics as a way to buffer user numbers. It didn’t matter if people knew they had a Klout profile or not – all that mattered was Klout could sell their service to brands and advertisers as “500 million profiles”.

About Klout

Yet there’s a big difference between a profile and an active user. Whereas Foursquare’s 45 million users are active, and therefore valuable to marketers looking to understand shopping behaviours, etc, Klout’s profiles included bots, automated accounts, multiple accounts set up for news feeds only, etc.

You can have 500 million “users” to sell to a potential advertiser – but if only a limited percentage of these users are real people actively offering up useful data, then your service is immediately devalued.

A Lack of Future Strategy

Perhaps where Klout failed most, and in turn lost a lot of the previous evaluation of a few hundred million dollars, is failing to adapt their platform to not only the “influence” industry they in part created, but meeting user needs and reacting to an ever-changing, and more demanding, content-led space.

Klout’s raison d’etre has always been to determine how influential someone is online, and allocate them a score between 1 and 100 – the higher the score, the more influential the person. At least, in theory.

However, the problem with any generic scoring solution – no matter how technical you claim the algorithm to be – is that scores can be gamed, and they don’t reflect the bigger picture.

Even in the early days of Klout being seen as a darling of the nascent social influence space, its algorithms were pulled apart in spectacular fashion when Justin Bieber had a perfect score of 100, while President Obama – arguably the most powerful person in the world – had a score of 88, while the Dalai Lama scored at 90.

As a result of the criticism they received about this, Klout updated their algorithm to show more real-world influence as having a bigger impact. Yet they resolutely continued to use scoring as a measure of influence, despite the flaws that strategy continued to show and despite their peers moving away from the public scoring game.

This lack of innovation and fresh direction was highlighted even more when compared to products like Traackr, who came out with solutions like their Influencer Network Analysis.

Traackr Influencer Network Analysis

This allowed users of Traackr to not only see who was influential based on real metrics like Relevance and Resonance, but also who essentially influenced the influencers – an added depth of identification that really laser-targeted the people you wanted to connect with.

Or consider Appinions, who measure offline influence as well as online influence, to offer a full spectrum of data and insights. This includes identifying the originating source of something that’s impacted discussion across the web, and how offline news stories and journalists drive online conversation and actions.

When comparing Klout’s social scoring algorithm as a measure of influence against real influence platforms that drive the insights needed for business goals, it was always going to be an uphill battle for Klout to be taken seriously as an influence marketing platform.

And then there were the Perks.

The ROI of Reach and Noise

Touted as a way to connect brands to the army of influencers in Klout’s database, Klout Perks were introduced in 2010 and were seen as one of Klout’s business models to monetize their platform.

Advertisers and brands would pay Klout a premium, which would differ based on the target audience and size of the promotion, and Klout would offer that brand’s product as a freebie to people who qualified based on their Klout score.

The problem was, there was no real relevance or context to the Perks. All that would happen is Klout would identify a bunch of people they perceived as influential in the brand partner’s niche, and – by giving them freebies like car test drives and airline trips – the Klout influencers would share their experiences and drive sales for the brand.

Klout Perks

Except that never really happened – or at least, not in the numbers that the brands probably expected, given the investments and amount of influencers promoting the brand’s goods.

The reason was simple – Klout didn’t dig deep enough into the audience of the influencer. They didn’t know if the followers of an influencer were in the market for the product being promoted; they didn’t know if they had brand loyalty elsewhere; and they didn’t know how contextual the influencer truly was in the area of the promotion.

This meant that, essentially, the Klout influencer was simply promoting without any knowledge of where their audience was in the purchase life cycle – a key factor in successful influence marketing campaigns (and something Sam Fiorella and I talk about extensively in our Influence Marketing book).

When you look at the public case studies Klout shares about their Perks, very few talk about tangible financial ROI. There are lots of examples of social shares, blog posts, etc., which is great for brand awareness. But for actual ROI and sales? Little evidence of success.

For brands that are spending upwards of $25,000 and more on Klout Perks, you want to see returns for your investment. The occasional example of ROI success after at least 400 campaigns and 1 million Perks being claimed is not a number designed to inspire confidence when it comes to breaking down your latest fiscal year’s marketing budget.

Klout’s Failure is Good News for REAL Influence

As I mentioned at the start of this post, $100 million isn’t chump change. However, given the financial history of Klout investment-wise, its business model of Perks, and its uncertainty as to what exactly it wanted to be (a recent pivot to a content curation platform seems too little, too late), you have to wonder what Lithium saw in the platform.

Perhaps it’s to identify influential customers (since Lithium serves the social customer industry), so that their issues can be resolved before they become an online crisis. However, that path could be fraught with negative feedback if customers feel they’re being ignored in lieu of “influencer customers”.

Perhaps it’s access to the data that Klout has. While there’s no question some of the data is for inactive accounts, there’s still a lot of information available for Lithium to integrate into its own solutions.

However, that’s for a future discussion once Lithium’s plans become clear. What’s clear right now is that Klout’s failure is a victory for real influence marketing technologies and strategies.

Social scoring was always a popularity game, with little relevance attached to actual influence – swaying a customer’s purchase decision at exactly the moment they make it – and more weight on social signals and amplification.

Now, with the flag-bearer of social scoring acquiescing to what almost looks like a desperation sale, the companies that are truly pushing the influence conversation forward can do what they do best, and meet the needs of brands and marketers that are looking for more than social shares when it comes to an influencer campaign.

Social scoring is dead – long live influence.

Update March 31: The Klout/Lithium deal has been signed off, valuing the company at $200 million in a mix of cash and shares in Lithium.

image: Jamie Koroluk