Earlier this week, I had a conversation with several members of one the world’s most recognizable technology companies.
During the conversation, I mentioned Klout, Little Bird, and Lithium, among several other companies doing interesting things on the fringes of mainstream corporate technology adoption.
Because the topics of influence and community and digital networks are central to the future of business; the the future of the planet, really.
This week, rumors began flying that Lithium is acquiring Klout. This came as a surprise to just about everyone. While a bit of a head scratcher at first, it quickly begins to make sense, in some scenarios.
Identity and Influence are important battlegrounds
The importance of digital (and real) identity is an important battleground over the next decade, mostly because digital identity will soon be synonymous with identity. Who we are in the world will be more closely aligned with our actions and interactions that are performed in a digital environment. Not only because we’ll choose to do more in digital over physical, but because the two worlds will simply merge into one. The physical world is in the process of being connected. (please see Internet of Everything and Internet of Things memes)
So, back to Lithium and Klout. Lithium is one of the market leaders in providing digital customer community platforms. Their customers include many of the most well known consumer brands in the world. Now that they are several years into working with and deploying these communities, natural questions begin to arise. At an early stage after launch, the obvious question “what is happening” within the community gets asked.
- Is it “working”?
- Why are people using the community?
- Why are people leaving the community?
- What keeps people engaged?
- What’s the ROI?
- Is it deflecting customer service calls from our call center?
- Are there any interesting innovation ideas being discussed?
- Are our advocates driving brand awareness and customer acquisition?
- Is the value of our community providing a meaningful impact on customer loyalty?
To help answer these questions, Lithium has acquired two social analytics companies over the course of their lifetime, ScoutLabs and SocialDynamx to help answer some of these questions on behalf of their “community” of customers. The fact that these interactions happen within the context of digital channels allows unprecedented access to analysis of human interactions, which is also why they’ve employed well respected neuroscientist Dr. Michael Wu to help make sense of the billions of interactions that happen across their communities.
The primary elements of communities
Two fundamental elements within the context of a community are the people and the content.
People often are attracted to a digital community for a specific purpose – namely to consume a specific piece of content, but they stay for the other elements; the people, the connections, the ongoing potential for fortuitous serendipity. However, it’s the content, created, repurposed, and reused by people that keeps the community alive. Some of this content is dynamic and ad-hoc. Properly done, relevant and timely strategically seeded content helps to continuously stoke community interactions and drive value.
So, where does Klout come in?
While Lithium has its own proprietary badge ranking systems that highlight “influencers” within the context of a community, Klout offers a measure of “influence” that exists across many of the internet’s most popular social destinations. While Lithium’s identity measurements are relatively narrow, Klout’s measure of digital influence is broad and considered more portable (at least in relation to Lithium’s current identity system). Merging the two values of identity with their respective broad and community influence rankings have several potential use cases.
Imagining a portable digital identity system that could provide an aggregate, broad based indicator of how influential a person was, in addition to a highly contextualized measure of who that person is in relation to a specific community could help organizations build new strategies about bridging their world with the outside world.
Klout has often been “beat up” for only espousing meaningless vanity metrics. One of the quick knocks on Klout is that the platform has lacked context around an arbitrary number that attempts to measure how important someone is on digital channels. However, taking the same algorithms and applying them to a very contextual digital space (think a beauty community like Sephora, or a community for Verizon Wireless), and all of a sudden a Klout score might be very meaningful. Cross correlating this internal “influence” score with the generic and public “influence” scores, might allow marketers to look for more contextual paths of influence.
Klout’s role in content
Like many other tech companies, Lithium has extended it’s capabilities in social publishing and content distribution. Just prior to the acquisition rumors, Klout pivoted it’s whole platform from an influence ranking system to a platform that allows individuals to create and distribute great content. It’s recommendation engine finds relevant content and allows you to share with your digital “communities”.
Functionally, as illustrated above, I see several potential intersections where value is amplified by merging Klout’s and Lithium’s shared competencies. The rumored acquisition price is in the 9 figure range, which puts the value at at least $100,000,000. I find this interesting given Klout’s lack of business model or reliable revenue stream and the relatively narrow gap between Lithium’s funding to date and it’s estimated market value.
Everything above is pure speculation based on publicly available knowledge, and my industry knowledge and understanding of both Lithium and Klout.
I did reach out to Lithium, but received no “meaningful” response.
It will be interesting to see how this plays out.