Marketers have long mined data from social networks for “influencers,” people whose favorable tweets and posts can boost product sales. The most successful tool available has been Klout, which launched in 2008 with investments from Kleiner Perkins Caufield & Byers and other venture capital firms, and whose clients include Walt Disney (DIS), Procter & Gamble (PG), and Audi (NSU:GR). It assigns influencers a score based on more than 400 data points, such as their job title on LinkedIn (LNKD) and number of Facebook (FB) friends. Recently, Chevrolet gave about 900 people with a Klout score of more than 50 a free three-day rental of the Chevy Volt, a move that resulted in more than 46,000 tweets and more than 20.7 million blog posts, most of them favorable, about the electric car.
Now two startups in Portland, Ore., are challenging Klout. Launched in early October, Tellagence and Little Bird say that they also help businesses zero in on social influencers, but in a more targeted way. These services identify people who are most likely to take active steps to influence consumers. “The Klout approach confuses influence and popularity,” says Susan Etlinger, an analyst at researcher Altimeter Group. Lynn Fox, Klout’s head of communication, says that the company’s approach provides the most accurate measure available. “Every day, we process over 12 billion data points,” she says. “To our knowledge, no other influence model comes close to processing data at this scale.”
Says Matt Hixson, chief executive officer of Tellagence: “We look at whether you’ll turn around and tell your friends.” The service takes into account the strength of users’ relationships with other key industry players (based on metrics such as how frequently they retweet their Twitter posts), and the number of times they have to see a piece of news on Twitter before passing it on.
Tellagence and Little Bird both use proprietary behavioral models and algorithms to find influencers in narrowly defined categories, such as mobile phone developers, who might help the startups’ clients. The companies’ algorithms may uncover surprises: people who don’t have a lot of social connections, don’t hold high positions, and have a low Klout score—but whose comments may move the needle on sales. Little Bird “really does an amazing job of identifying people you would never expect to be influencers in categories that get very granular,” says technology entrepreneur and Dallas Mavericks owner Mark Cuban, one of the company’s investors. Clients pay Little Bird $250 to $2,500 a month. Tellagence’s service starts at $500 per month for each community (say, car experts) a client wants the company to analyze. Klout won’t disclose its fees.
Little Bird raised $1 million from investors including Cuban and the ad agency Wieden + Kennedy, which counts Facebook as a client. Tellagence secured about $910,000 in funding from Rogue Venture Partners and others. Social analytics “is an exploding space that hasn’t been done perfectly,” says Jason Mendelson, managing director at Foundry Group, who recently watched Tellagence’s presentation. “Certainly people have another alternative to going to Klout now.”
Eight clients, including five Fortune 500 companies, are using Tellagence. Little Bird CEO Marshall Kirkpatrick won’t disclose the names of its customers, but says 24 companies have signed on and more than 4,000 companies and individuals have made inquiries about using its services.
The startups’ new approaches could appeal to companies still trying to figure out how to use social networks. According to a recent survey by Altimeter Group, only 30 percent of brands consider themselves to be “effective” or “extremely effective” at connecting social media to revenue, in part because of poor tools and lack of analytics expertise. “One search with the Tellagence tool can save hours and hours over weeks,” says Kerry McClenahan, chief executive of McClenahan Bruer Communications, which has been using the software on behalf of its client Intel (INTC) since March. “Nothing that we’ve used before has given us such good results.”
The Recording Academy, which produces the Grammy Awards, is testing Tellagence while also using Klout and another service, Kred. “Candidly, I don’t think any one service is the definitive standard,” says Evan Greene, the Recording Academy’s chief marketing officer. Says Tellagence’s Hixson: “We do not intend to be a one-stop shop. There will be people that continue to use Klout and Kred, which is fine. If there is a business need that requires the use of the loudest people online because you need to broadcast your message, then these tools fit.”
With client interest high, analysts expect larger companies such as SAP (SAP), Salesforce.com (CRM), Adobe (ADBE), and Microsoft (MSFT) to acquire social analytics startups to boost their software and services offerings. “Ultimately, they are just part of a solution,” says Dan Maloney, a global vice president at SAP, which uses Kred to find new customers online. “If we decide this is core for us, we might acquire. Are Klout and Kred important? Yeah. Are they the only piece of the puzzle? No.”