As it sails into the sunset, thoughts on why Klout mattered

By Mark Schaefer

Klout’s parent company Lithium announced that it is shutting down the pioneering social influence measurement system.

Most people hated Klout. There was a time that I disliked it, too … until I began to understand it. In 2011, I wrote the first book on influence marketing (Return On Influence) and had an opportunity to conduct an in-depth study of this company and its founder, Joe Fernandez. Arguably I learned more about Klout than any person outside the company.

And I discovered that the critics were wrong. I was wrong, too. Klout was on to something important … something almost everybody overlooked.

This is what I found, and these are the surprising reasons why Klout impacted our marketing world in significant ways:

They were the first

Today, we take influencer marketing for granted. It is everywhere. There was even a segment on influencer marketing on the CBS morning news last weekend!

But when Klout was founded in 2010, nobody had seriously considered the idea. Sidelined by a jaw surgery, Joe Fernandez had plenty of time to muse and think about data and social media. He noticed that there were certain people whose content seemed to move effortlessly through the web and spread in a viral way.

Was there a way to assess that content flow, and even predict who could influence others? He became obsessed with the idea, hired a team of coders, and soon introduced an early version of Klout, the first tool that claimed to measure online influence. This was the event that kicked off influence marketing as we know it today because for the first time, you could score personal web activity.

It also set off an unfortunate ego-driven competition, a Klout score feeding frenzy. People OBSESSED over Klout.

Fernandez could have never predicted the chaos in his future …

The firestorm

I cannot recall any software company in history that was more reviled than Klout. The fury currently facing Facebook was nothing like the constant stream of hate thrown at Klout in its early days. A certain group of bloggers made it their goal to find ways to humiliate the company and its founder by relentlessly poking holes in its algorithm and business model.

Certainly, the company had its problems.

  • It could be easily gamed (and it was).
  • The scores and topics of influence were often wrong, and sometimes silly, as Klout tried to iterate and improve under the constant glare of public opinion.
  • Most of all, people loathed the idea that an algorithm could assess their personal influence … especially when they didn’t stack up well in the rankings.

I first wrote a blog post about Klout in 2010 and I’ll never forget one comment: “I hope you’ll join in me in fighting this company, Mark. It’s Un-American!”

Even though competitor platforms quickly emerged like Kred and PeerIndex — they both did the very same thing in nearly the same way —  Klout took all the heat.

To his credit, Joe Fernandez answered every question and fixed every problem no matter how bad the haters ranted. In the face of absolute chaos, Joe was a class act. And the nicer he was, the madder the trolls became.

Why Klout was right

In my view, Klout’s lightning rod was its slogan: “The Standard for Influence.” Of course it could not be, and never would be, a standard for influence. But people could just not get past that bold claim.

As I researched my book, I had an exceptional opportunity to peer deeply into the company. I discovered that Klout was not the fluffy start-up people thought it was. This was a fast-growing company fueled by a team of PhD-level scientists and the world’s most sophisticated investors, including Kleiner Perkins.

Klout had made a significant discovery. Their complex algorithm didn’t necessarily measure influence, but it did measure a person’s relative ability to move content through the web.

In essence, they quantified a person’s ability to create buzz. And that, ladies and gentlemen is a very big deal.

Years later, I would write in The Content Code that other than actual conversions/sales, I regard social sharing as the most important measurement for digital marketing. It is an indicator of advocacy. The value of content that is not seen and shared is zero. We must get the content to move to achieve a return on that content investment.

Think about it. To succeed in the content world today, you have to:

  • Create or curate content that is excellent
  • Build an audience that cares about it
  • Engage with those folks in a way that encourages sharing of the content

This complex cocktail is exactly what Klout codified!  In fact, an ability to move content (and measure that movement) is the heart of the mainstream influencer marketing industry today and the single reason brands are investing so heavily in this space. Klout was ahead of its time.

Klout was pervasive

A few years ago, I led a research project on influence marketing sponsored by one of the biggest advertising companies in the world. What I found was fascinating. At that time 85 percent of the U.S. agencies had some sort of influencer outreach program, and they all had their own “proprietary” influence measurement system. But when I pressed hard for the source of these measures, I found that almost every one of these agencies used Klout as the foundation for their calculation.

My conclusion was that Klout was the underlying influence software for nearly the entire advertising industry! Their highly-touted influence measurements were simply “Klout with sugar on top.” Many of the people who made fun of the company secretly used it any way. They built their careers on it.

Susan Borst of the Interactive Advertising Bureau commented: “Many never understood how Klout powered some really big name companies’ “influencer assessment” offerings.”

As Klout shuts down, I think a lot of agencies will be scrambling for a solution in the next few weeks!

And it wasn’t just agencies. Major companies like Audi, Proctor & Gamble, and Coca-Cola used Klout extensively in the early days. So while the critics raged and whined, industry leaders saw the potential of this new thing called influencer marketing, and Klout was the epicenter.

Klout mattered

In 2014 Joe Fernandez sold his company to Lithium and became a multi-millionaire. He got married, started a family, and has been quietly working on a couple new start-ups in the LA area. Once it became part of another company, the energy and innovation that placed Klout at the top of its field dried up.

A Lithium spokesperson reported to TechCrunch that Europe’s General Data Protection Regulation “expedited our plans to sunset Klout.”

Klout has never really stopped being the butt of jokes but the fact is, the people making the jokes don’t appreciate what the company actually accomplished:

  • They pioneered measurement in what is now a multi-billion-dollar influencer industry.
  • Klout has been the underlying technology for many other industry measurement platforms. Even today, the top influence companies analyze data very similarly to how Klout started doing it almost ten years ago.
  • They developed a way to quantify the movement of content on the web. While that is not nearly as sexy as “influence,” it is a significant achievement.

Now that Klout is sailing into its sunset, perhaps the jokes will finally stop. At times in the past, I felt like I was the only blogger on earth who defended the significance of what Klout had accomplished. But I am also satisfied that I was right.

Farewell Klout, and thanks.

Keynote speaker Mark SchaeferMark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant.  The Marketing Companion podcast is among the top business podcasts in the world.  Contact Mark to have him speak to your company event or conference soon.

 

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