Influence, Authority or Word-of-Mouth?

For the past week, I have been watching a bunch of folks discuss the changes to Klout's algorithm and have been amused at the concerns people have had.  I should tell you that my Klout score has dropped from an average of 57 to an average of 49 - with variations in between.

And whilst I work as the CTO of PeerIndex (the competitive offering to Klout), I am bemused by the hub-bub.

I hand it to Joe and the Klout team for building an effective business model for a Perks-based Groupon.  In my estimation, the business model goes something like this:

• Create a ranking mechanism based on actions within the social web - primarily in twitter, but include other signals from LinkedIn, Facebook, etc.  Define influence as "causing an action in others in your network" and link it primarily to tweets, RTs, and shares.
• Create a Perks program that requires others to have to compare their Klout rank to an arbitrary threshold (one chosen by Klout with a partner) to suggest that if you have a rank higher, you are an "Influencer" and if lower, you are not influential enough - and target the social media engagers.
• People who get the Perk are thrilled and may be happy enough to tweet, blog or post about the Perk - with Klout branding and using the influencer's network.
• People who don't get the Perk are upset and comment on how it is not an accurate measure of their "influence" and either complain on the blogs, feeds or whatnot or track their score to see how to improve it - or both.
• More Perks means more chances to get freebies - and more chances for social media people to react - either with glee or jealousy.
• Klout ensures it has the channel to the individual social media influencers (by requiring the email address initially) and then triggers when a Perk is possibly available to them.

Resulting in:

1. A private Klout-engaged email mailing list for potential "influencers"
2. Brands paying for Klout's marketing expenses when Klout takes care of the logistics and fulfillment
3. A growing desire and ownership of the Klout score (e.g., "If I get my score higher, I will get Perks!")

Now, with their increasing growth, Klout has now removed the requirement to have their branding all over the packaging (thanks Steve Garfield) and even I got a Perk from one of the campaigns.

But I liked Robert Scoble's discussion from last week over what is Klout selling?  As in, is it being poorly pitched (click the link for the audio)?

Expertise versus Causes Action

When I first joined PeerIndex, I spent an evening with a gentleman who wanted to discuss with me the concerns he had about ranking individuals by their social media actions.  "How could you estimate my influence on any topic?  You know nothing about my education, my work, my writings, nothing."

And he is right.  And neither Klout nor PeerIndex suggests that.  Heck, see Klout's newest popup when you join - it clearly says "a higher score means you are driving more online action."

At PeerIndex, our PI Score you see in the Yellow Box has a similar metric - designed to suggest people who are great at driving online action - not that they are more famous or influential than anyone else.  The difference in in the Topic PeerIndex scores.

As a proxy for expertise, we use your engagement in a particular topic to identify your areas of expertise - even if you do not have a degree in that area.  If you are engaged on a topic like "Peer Influence", and you are effective at spreading a message in that community, then we rank you higher than others.  If you are engaging within that topic community - have others chat with you, share your link, comment on your blog posts, then we rank you higher.  We have been focusing on this segmentation because, in our opinion, helping brands and agencies connect with effective word-of-mouth advocates is not about popularity, but about engagement within their peers. 

Word of Mouth Marketing (circa 2005) is Influence Marketing (circa 2011)

What I love about this market today is that we are discussing the concepts that have been requested for time immemorial.  But unlike 2005, where we would spend all sorts of time trying to figure out blogger outreach and viral videos, we now have twitter's API, bit.ly URL shorteners with analytics. Facebook social graph and the Big Data tools to engage with the torrent of data that comes from this.

Google has had the corner on the Big Data market for some time for Google AdWords and AdSense, and Facebook is ramping up fast to use its data sources in a similar fashion.  And with Hadoop, other companies like ourselves and Klout are crunching through data sets that would have seem impossible or prohibitively costly to manage.

Today, Klout, Kred and PeerIndex are providing metrics for scoring yourself on how effective you are on word-of-mouth marketing - as measured on the social web.  Kred is going one step further in allowing you to provide offline influence credentials to add to your Kred score (yes, send your degree to them and you get +1000 Kred points!).  But the question that I ask - what are YOU looking for?

You - as in the owner of this exhaust data that is out there in the world?  Or you as the brand manager who is looking to improve your engagement with your advocates or simply your customers.  What is it you would like to see in this world of Influence / Engagement Marketing?