This morning I saw one of the best commentaries on Klout that I’ve seen in a while. It’s a comment by Bernadette Jiwa on a post from the {grow} blog:
Click to be able to actually read the comment
By the way Bernadette, I really like the look of your website. Slick.
You Are Not The Customer Of Any Social Network
Let’s look at how these places make money shall we?
How Twitter Makes Money
I am tempted to say that your guess is as good as mine and for a long time it would have been. But today we know that Twitter is making money from:
- Promoted tweets
- Promoted trends
- Promoted accounts
- Analytics
- Access to their firehose stream (all the tweets your servers and bandwidth can handle)
GOSSIP ALERT!!! A little birdy told me they are starting to monetize hashtags and that it’s possible in the future if you tweet with a “monetized” hashtag your tweet will simply disappear. But don’t take that as fact, just yet. If they’re going to do it you can’t buy it just yet.
What do we give Twitter? Links to our sites, part of our social graph, information on what we like, and a bit more.
How Facebook Makes Money
Facebook has been raking it in with advertising for a long time. How long? Longer than I can remember. Aside from advertising Facebook also makes money from sponsored stories. Can’t seem to get your Facebook page updates into someones stream because you just don’t have that much interaction? That’s where sponsored stories come in.
There’s also the Facebook virtual currently – Facebook credits. You can sell virtual goods (think “in games”) for credits and then redeem them for actual cash. I haven’t used them so check out the Facebook Credits page for all the details on those.
What do we give them? A metric ton of personal data.
How Google+ Makes Money
Google’s standard business model has been to give us all access to their apps for free and put highly targeted ads in front of us. That made them quite a large sum of money.
So wek now they sell multiple formats of advertising including AdWords and DoubleClick. In addition they also sell:
- Search solutions
- Enterprise-class online applications (email, docs, etc.)
- Email security (Postini)
- Premium Google Maps and Google Earth products
What do we give them? Depending on what product of theirs we’re using we could tell them where we spend our online, what sites we like, where our websites are, and much more. But don’t worry – you’ve already been assimilated.
Is it only a matter of time before ads show up in Google+? We’ll see.
How LinkedIn Makes Money
LinkedIn has advertising too along with selling information to recruiting solutions (which makes sense as it was started by recruiters). But in addition they also have some premium offerings for your account ranging from US$24.95/month to US$99.95/month which includes:
- See more profiles in search
- Save important profiles and notes
- Access to premium & talent search filters
- More introduction requests
- See full names of 3rd degree connections and groups
- See all the connections you have in common with someone (for reference checks)
If you’re a recruiter, job seeker or looking for more clients LinkedIn premium options seen like they are worth the money. If you’ve used them let us know in the comments below how well they’ve helped you.
How Klout Makes Money
So how does Klout make money? Klout Perks.
What are Klout Perks? Well… as you go about interacting and influencing people on the social medias you unlock different perks. Perks can be all sorts of things, but it comes down to a type of “gift” you get from a company.
Here’s an example of one I’ve recently unlocked:
Moo cards are the bomb though so +1 on this perk.
By the way Moo cards are awesome so to me this one is a winner.
But Klout is tricksy. Not only do they NOT notify you when you’ve opened up a perk (meaning you have to go to their site on a regular basis and keep checking) but they tell you that you don’t get stuff but your friends do. Nanny nanny boo boo. But I bet it works really well 
Yay psychology and gamification!
Perhaps Klout knows I don’t get outside much and when I do it isn’t for sporty-type activities…
How Just About Every Social Network Makes Money
The standard business model for any social network is to collect our data – demographics, likes/dislikes, location – and package it up nicely for sale to advertisers in some form or fashion. This business model apparently works pretty well as it continues to be used.
It seems that we all know how dead privacy is and many have just given in.
And This Is Why Bernadette Is Sooo Right
Nowhere in there do I see we, the users, being part of the target markets of these social networks. Why? Because with the exception of LinkedIn (and only if you so choose to pay) we aren’t paying to use them. That’s how their business models work. We get free access, they get a crap ton of our information, and they provide that to advertisers who pay to get their stuff in front of us.
Now as an advertiser on these social networks I urge you to please continue to enter in as much information as you want. The more I know about you the better I can put my ads and those of my clients in front of you at the right time.
And I thank you for it.
The point here though is that ultimately if you get enough people complaining about a feature update or feature removal the company might change it back. But if they don’t, we have to make a decision: it is worth leaving these networks?
But Should This Nice Message From Klout Worry Me?
- Oh noes my Klout score dropped?! Oh well back to business.
It doesn’t worry me in the least. Also I’m not that active on Facebook outside of advertising. So perhaps I should disconnect my Facebook profile from my Klout profile? I’ll do that and see what happens. Regardless…
I still believe that being on a list isn’t the best way to get clients. The best way to get clients is to excel in asskickery and deliver big time for your clients so that you get outstanding testimonials you can put on your landing pages.
Testimonials are the most powerful form of social proof there is. I know for a fact that the testimonials I have on my landing page have been highly influential in getting a number of my clients.
This also stresses the need for every service provider to build a referral partner network where you can both refer and be referred.
Hi Robert,
Thanks for the mention and your kind words.
Klout has tapped into one of the most powerful human needs on the planet and harnessed an algorithm in attempt to measure it.
What we all want to know is that we matter. Klout found a way to prove that we do or don’t. Our fear of not mattering means many of us have lost all sense of perspective on this, and I’m glad that people like you and Danny Brown are blogging about it.
Seth Godin is a great example of someone who isn’t even engaged in conversation on social media, but who has influenced business and leaders for years. I bet he’s not sitting worrying about his Klout score and I know what he’d be telling us if we asked him what we should do about it.
Here’s that guest post I wrote over on Pushing Social last January which I hope helps people to focus on the real difference they make in the world.
“Go.. do something that matters.” Seth Godin
I’ll have to disagree with you when you say that Klout has “found a way to prove that we do or don’t (matter).” Perhaps you mistyped that. But just in case you didn’t…
Klout to me isn’t proving much of anything in terms of whether or not we matter and to whom. The greatest thing lacking in Klout is context. For example, I know a number of business consultants that are just now getting into social media who matter very much to their clients, having brought them back from the brink of bankruptcy and transforming their companies into great successes. They matter a lot to their clients and people like them.
As you say Seth Godin is someone who has influenced many, and probably doesn’t care at all about his Klout score. Can you measure Seth’s influence online or off based on how whoever tweets for him interacts with others on social media? No.
I’ll go so far as to say it’s ridiculous to even try to do that or presume that we can.
What Klout has done is to put together a nice little game for all of us to play (consumers and businesses alike) and make a good amount of money doing it. They are using solid psychological and gaming principles in their app which is getting people to use it and rely on it (not smartly) as a measure.
I will give them respect they deserve for that, but not for helping us move ahead in social media.
Robert obviously Klout doesn’t actually prove that we matter, not a bit. As I said in my article on Pushing Social, there is no metric for mattering. Real impact and meaning can’t be measured.
BUT some people will use it as a metric that they are achieving something. There are people who care enough about their scores not to take a break from social media for fear their score will drop.
Companies are starting to pay attention too.
Someone like Mari Smith for example, would be expected to maintain a high Klout score if she’s advising others on Facebook, Twitter and relationship marketing. Klout scores will become another metric for judgments to be made.
I can see a future where high scorers will be targeted by companies to advertise their products and services, context or no.
Thanks for clarifying this part of your comment, “What we all want to know is that we matter. Klout found a way to prove that we do or don’t.” That’s what I picked up on.
A number of people on Twitter have mentioned to me that they use Klout to measure themselves and their communication efforts. Of course you’d have to know what the metrics are composed of in order to be able to improve them. Does that mean Klout should open up about their scoring mechanism? That could lead to gaming but I think it can already be gamed to a certain extent – everything can.
I’m doing a test this week. I’m mainly active on Twitter, Google+ and to a lesser extent LinkedIn. I disconnected all of the other networks. With 12 networks covered by Klout we’ll see (at least for me) if they care about whether or not someone dedicates their life to being on social media. In my world of entrepreneurs that’s not possible. But perhaps those aren’t the people Klout is trying to bring into the fold. Perhaps that want people that talk more than do…
Fortunately for me with my business I get to do both
Let us know how it goes!
I’ve stopped looking and don’t have a connected account even though my score was climbing at that point (no idea what it is now). I’ve made a conscious decision to focus my attention on doing the best work I can for my clients.
I’m doing the same. Great to meet another kindred soul.
I look at Klout a bit like Google page rank. Nice to know, maybe somewhat useful in some regard for credibility, but not something I’ll lose sleep over.
Hi Cori – I hope things are getting better for you. As for Klout, do your clients know or ask about it at all?
You’ve combined to express my own thoughts. Good on you.
I find Klout pointless. I’ve been in, had a play and left. I nod sagely when I get a Klout message in my email, noting that it’s correctly been filed as spam.
Bah, social media humbug.
I wouldn’t call that social media humbug Jon, more like an acceptance of the reality of how things are.
The thing to understand is that while the scores dipped…they dipped for almost everyone. This doesn’t really affect either job opportunities or advertising opportunities in the long run since all of your competition was (usually) impacted too. Yes, 60 is the new 80 because the baseline shifted. It’s still important to have a strong number – it just is a little unnerving when trying to get our equilibrium to a new number being the right one. Pay attention to it – but not too much – keep serving your community, doing whats right, building engagement and understand that it is only one of many metrics.
Kim
Wise words Kim thank you for them.
Thanks for being the voice of reason in the recent madness which has been going on about Klout this week.
I had one friend on the verge of tears, she felt her clients would think she was lying when she stated her Klout score earlier last week (before the drop).
Others have gone all negative and accusing Klout of everything short of being responsible for JFK’s assassination.
Yes to more real world ass kicking and less gimmicks
I’ve seen arguments on both sides of the fence on this one. Yes companies are using it to determine “influence.” Is that responsible on their part? No. Can you truly measure the influence someone has online? No.
For instance, Seth Godin’s Klout score is 67. He’s influenced millions. So seriously, all of us in business shouldn’t be using these scores as serious measures.