Lithium Technologies, a social customer experience management software company, is reportedly buying Klout for at least 100 million and heading for an IPO. Unnamed sources told Re/code that a deal has been signed but is not yet closed.
Klout scores social-media users according to their digital influence on a scale of 100. The company has had its share of ups and downs, amassing either accolades or criticism; otherwise it drew little to no press attention at all. In September, COO Emil Michael resigned from Klout to become Uber’s SVP of business.
In 2011, the media denounced Klout’s algorithm, comparing Justin Bieber’s perfect score of 100 to Barack Obama’s measly 58. Klout relaunched the product and kept people from being able to game the system. Today Klout’s API usage in on par with Facebook and Google.
Media speculation about the buyout has been positive for both San Francisco based companies as Lithium’s social-media focused customer-service application will likely pair well with Klout’s analysis of social-media influence. According to Re/code:
It’s a dead-on fit in terms of topic focus for the two companies, but it’s also a save for San Francisco-based Klout, which had two years ago raised a $30 million Series C round from investors including Kleiner Perkins, Venrock and Institutional Venture Partners, for total funding of more than $40 million. Klout CEO Joe Fernandez has been telling a tale of redemption in recent months, after his company became a bit of a whipping boy for criticism of the vanity of social media.
Lithium provides social customer experience management software for the enterprise. In September, the San Francisco company said that it had raised $50 million in “pre-IPO mezzanine financing,” bringing its own total above $150 million from New Enterprise Associates, Benchmark, Shasta Ventures and others. Its customers include AT&T, BT, Best Buy, Indosat, Sephora, Skype and Telstra. Because it is likely to go public, the price for Klout could be more (or less).
The buyout could also have implications for other social platforms trying to measure online influence such as New York City-based Crowdtap. That company aims to help marketers “inspire a crowd of consumers to create quality content, drive unmatched social activity and provide real-time insights.”
The company’s CEO, Brandon Evans, believes the Klout acquisition reflects how technology companies try to piece together richer platforms to allow brands to create value from their influencers, and that the deal puts Crowdtap among the largest players in the influence marketing space. “The definition of influence marketing is changing and peer-to-peer content creation [content created by customers] is a huge part of the new social media marketing reality,” he said.
“We know the people closest to us hold the most influence over our purchasing decisions and that continues to become more scalable and measurable. Marketers are now able to effectively engage with smaller but more powerful social circles that collectively offer scale but with greater influence.”
Crowdtap’s customers include Verizon, P&G, Nestle, Kraft, AT&T and Sony.