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Q&A: Joe Fernandez, cofounder and CEO of Klout

When streaming music service Spotify launched in the US on July 14, it tapped social analytics company Kloutas well as large brands such as Chevrolet and The Coca-Cola Co. — to gin up awareness. Klout measures consumers’ online social influence by calculating quality scores based on Facebook, Twitter and LinkedIn accounts (Foursquare and YouTube will soon be included) and also connects brands with registered influencers.

Klout cofounder and CEO Joe Fernandez tells Direct Marketing News that the company plans to expand its capabilities to one day help marketers track social media ROI, as it did for Spotify.

Direct Marketing News (DMN): Are you seeing any reticence from consumers who may be wary of calculating their Klout score for fear of returning a low score?

Fernandez (Klout): Actually we have Klout scores for about 100 million people. We don’t need people to register to get Klout scores. We’re pulling public data, so whatever kind of content people are creating across the Web, we can pull. People registering is great because they enhance that data for us and also give us the ability to give them Klout Perks, like Spotify accounts.

DMN: But who are marketers able to target with Klout?

Fernandez: Right now it’s primarily registered users because they give us their email addresses. They opt in to be contacted, whereas we have data on the broader group, but we’re experimenting with how to actually contact them in a way that’s not spammy and produces the right kind of engagement.

DMN: Of the people who do opt in, are their Klout scores higher than the average of the 100 million people you have data for?

Fernandez: Yeah. It’s funny; somebody gave an internal presentation on [July 15], and it turns out the average registered user has twice the influence of the average overall Klout score. If you think about it, it makes sense because people who are going to register are the most self-aware of their brand and their social media effort.

DMN: How successful have the advertising campaigns run on Klout been, such as those from Starbucks and Audi?

Fernandez: They’ve been great. It definitely started out as an experiment, and now we’ve run more than 50 of these. They’ve been overwhelmingly successful. Eight percent of the brands that have done one have come back and increased spend doing more campaigns. The users really love them because we’re giving them experiences for topics that they’re really influential about and really passionate about. The amount of content that’s created from these campaigns [averages] 30 pieces per person invited into a campaign.

DMN: How does that compare with your expectations from when Klout was launched?

Fernandez: We look at what we do, which is that we work for the influencers. Our job is to provide them with exciting experiences. So we didn’t really know what would come out of it, but we wanted to give them cool stuff. It was funny. I was looking back at all of this old stuff and I had a copy of the first email we sent out, and it was something like, “Hey, give this a try; hope you like it.” We were worried about what would happen. Would people be annoyed that we were offering them this stuff? We definitely took baby steps in the beginning. I’ve been surprised at how much content has been created per campaign.

DMN: When Spotify launched in the US on July 14, Klout was one of the launch partners along with Chevrolet and Coca-Cola. What did that say to you about where Klout stands?

Fernandez: I think people are seeing that we’ve tapped a very special audience in terms of product launches. Klout users are early adopters who are extremely vocal. They’re really engaged with Klout. We’ve done launches like this with Virgin America for one of their new routes. We did it with Audi on the A8. We’ve done it with a bunch of movies. About 60% of our campaigns have been product launches. So we’ve gotten a lot of practice, but to be in that company of Coca-Cola and Chevrolet as a strategic launch partner on a product this big was really rewarding. It got the team really excited. We had the team here at 4 am on launch day and here super late every night getting ready for it because we knew we’re playing in the big leagues now and we wanted to hit a home run.

DMN: The response from consumers was so big that you guys actually had to stagger the invites over multiple days. What was the size of the response to the Spotify partnership?

Fernandez: We projected 30 times [the size of] any other campaign we’d ever done. We thought that was playing it pretty safe. We blew that out in a couple hours. It was a very, very good campaign. It was really aligned. We worked really closely with Spotify, and I think they were impressed by the results.

DMN: Klout’s profile seems to be the highest it has ever been. Does that help when you’re talking with advertisers about Klout tracking a social media campaign’s path to conversion?

Fernandez: It feels like now that we’ve established some credibility and these bigger brands are starting to not just believe in what we’re doing, but believe that we’re going to be around for a while to see it through. I think there were questions earlier this year and end of last year about is this social media influence on marketing a novelty? I think the results are starting to show that it actually works. Investing the time and effort to quantify the lasting value and the ROI around that process is getting more attention and more resources.

DMN: What’s involved with Klout being able to measure that conversion path?

Fernandez: They’re all kind of case-by-case. Spotify is actually going to be a little bit easier because it’s a digital good. We’ll be able to track how many of the people that came over from Klout actually downloaded the app, how many of those people shared it, and how many of those people [that it was shared with] converted to paying memberships. It’s a digital trail that’s more straightforward. Other ones are a little tricky. If I think about the Audi campaign, let’s say you got an Audi from Klout for a weekend, spent some time with it, and I’m a good friend of yours. I might not be in the car market for three or four months, and then I show up in a random dealership and remember you saying how awesome the A8 was when you got to borrow it. It’s really tricky to tie that loop together. It’s a matter of finding the right scenarios where there is that data trail and getting resources on the other side of the table from the brands that are willing to share that data back to us.

DMN: Do you think the work Klout has done with companies like Spotify will draw other, larger brands to believe that Klout will connect the online and offline paths to conversion?

Fernandez: That’s our hope. We’re looking at every means we can to try to measure this, whether it’s partnering with a third party like The Nielsen Co., or different couponing models. Even though right now people are generally comfortable with just experimenting, to grow this out long term we need to be able to show these kinds of metrics.

DMN: What does the rest of this year look like for Klout?

Fernandez: The focus of the third quarter for us is what we internally call “Perks Everywhere.” We did our first “Klout Perk” with Starbucks over a year ago, and the model hadn’t really evolved much since then. We put most of our effort on the platform. So this quarter has been about starting to build a better dataset around these Perks in terms of how we measure them, how we sell them, and how we distribute them. Spotify is a great example of that. So I think you’ll see more of an evolution on the Perks side. That is going to be a process that continues through the rest of the year.

DMN: Recent big news was that you’ll factor Foursquare into consumers’ Klout scores.

Fernandez: That will be fully live [this] week.

DMN: Does that play into the Perks Everywhere plan because, it seems, if you bake Klout into Foursquare then you can integrate Klout advertisers?

Fernandez: We’ve had some preliminary conversations with the Foursquare guys about that. Most of our Perks have been really high, brand-level stuff but eventually getting down to local is something that’s really interesting.

DMN: Are you looking to do anything with Google+?

Fernandez: Definitely. We pretty much have a model [drawn] out and a team ready to go. We’re just waiting on them to give us API access. So as soon as that happens, it becomes a top priority.

DMN: Since the Foursquare announcement, have you heard anything from advertisers that uniquely takes integration into account?

Fernandez: Nothing specific yet. I know users are really excited about including Foursquare. We have some overlap with Foursquare in terms of working with some hotels. I do anticipate that coming up, but I haven’t had any specific conversations yet.

DMN: Do you have other social networks that you’ll integrate soon?

Fernandez: YouTube will come right behind Foursquare.

DMN: When will the YouTube integration happen?

Fernandez: Early [this] week, we’ll start to [make the news public]. Usually, we’ll put out [a method] where you can connect your account and then a couple weeks later we launch the actual scores. Then whenever Google+ hits that will be top priority.

DMN: YouTube seems like a forgotten social network, in that people think of it primarily as an online video storage bin. What are the social strengths of YouTube from a Klout perspective?

Fernandez: The big thing for us is how many subscribers you have if you have a [YouTube] channel. If you think about a cosmetics brand where you have these YouTube channels where women are trying on outfits for fashion or showing makeup, they have thousands and thousands of subscribers. That’s influence for us.

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